King & King Business Advisors

August 10, 2008 — Pasadena, Maryland
In the early morning hours on Sunday, August 10, 2008 Pasadena Maryland we meet, Me, the Broker, Hassan Channaoui, the Buyer, Glenn Brumwell, the Seller, and Justin McInerney, a Settlement Attorney from Transaction Trust Services, (a King & King Business Advisors Prestige Partner), come together one last time to finalize all of the paperwork, write checks and exchange keys. It’s official, we are proud to announce that King & King Business Advisors was selected by both the Seller and Buyer to represent them in this completed business transaction. The picture in this article depicts the Buyer-Hassan Channaoui (left) and Seller-Glenn Brunwell (right).
Congratulations Glenn on the sale of your business, Brumwells One Hour Heating & Air Conditioning and, Congratulations Hassan on your acquisition. Good Luck to you both.
Jim King, President
King & King Business Advisors

July 18, 2008, Woodbine, Maryland

Mr. James M. King, President and Founder of King & King Business Advisors, is proud to announce that Mssrs. Wayne and Mark Kraus have joined the firm to form a new industry specific consulting and sales group which will work exclusively with the owner’s of Bowling, Skating, Arcade, and other Recreation related businesses assisting them in developing successful succession plans and implementing business process improvements to make their businesses more profitable and increase their equity value.

Wayne Kraus has been in the Bowling & Family Entertainment business as an owner and operator in the mid-atlantic region for over forty (40) years. Most recently Wayne was the owner of Thunderhead Lanes Bowl & Grill located in Taneytown, Maryland. In December of 2007 ,with King & King’s assistance, Wayne sold Thunderhead in a multi-million dollar transaction to a local entrepreneur. After a short period of rest and relaxation Wayne has now decided to go back to work helping other center owners to increase their gross sales, drive down expenses and build real equity value. Additionally, Wayne will be traveling throughout the region working with center owners to find suitable buyers for their businesses.

Mark Kraus has also worked several years in the industry, most recently serving as the General Manager of Thunderhead Lanes Bowl & Grill. Mark has a firm grasp on the day-to-day operations of the business and an uncanny understanding of the market and the consumer. Additionally, Mark turned a profit above and beyond industry standards and benchmarks year in and year out. Mark will be working with Wayne on consulting engagements and assisting buyers and sellers with transactions.

Welcome aboard Wayne and Mark, may our association last a long time and bring many valueable services to our Entertainment Industry clients.

Many of you that know me know that I am a dyed in the wool, flag waving, flag wearing, Harley-Davidson riding, “love it, or leave it,” in your face Patriot with a capital P. All year long I look forward to Memorial Day weekend. For me it marks the official beginning of the summer season and it’s the one weekend in the year when I can ride my Harley into Washington DC with 400,000 +/- of my motorcycle riding friends to express my sincere concern for all POW’s & MIA’s and to show my gratitude and appreciation for all of the Veterans that have ever served our country.

There are a few Veterans that have had such a huge influence in my life that I want to thank for their service to our country and for always being there for me:

David King, U.S. Navy WWII (my Dad)
Herbert Ernest Daniels, U.S. Army - Paratrooper WWII (my Uncle)
Herbert King, U.S. Navy fought in WWII (my Uncle)
William Daniels, U.S. Army – Paratrooper WWII (my Uncle)
William Daniels, Jr., U.S. Navy fought in Viet Nam (my Cousin)
James Barbour, U.S. Air Force (Father-in-Law)
Herbert Lee Davis, U.S. Army fought in Viet Nam (my Brother)
Frank Davis, U. S. Navy (Brother)
Ernest Daniels, U.S. Army (Cousin)
Regis Canny, U.S. Air Force (Brother-In-Law)
Lennie King, Sgt. U.S. Marines (Brother)
Matthew Wayne Walker, U.S. Air Force (my Step-Son)

Whether it is rainy and cold or absolutely beautiful like it was this year, it is always a humbling experience to be in the presence of so many people that take time out of their lives to pay their respects to our fallen heroes and express their gratitude to all other Veterans for their service to our country.

On the Sunday of the Memorial Day weekend we gather at the local Harley-Davidson dealership in Frederick, Maryland in the early morning hours to share coffee and donuts, seemingly endless war stories, and to get organized for the ride into the city. At 9AM we leave, approximately 2,000 of us. We travel south on Maryland Route 270 with Police escorts to our destination the Viet Nam War Memorial (“The Wall”). All along the way we’re greeted by people who have stopped their cars on the shoulder of the road to acknowledge us as we go by in mass with our flags waving and tears in our goggle covered eyes. On the bridges and overpasses there are individuals and families, Moms and Dads with kids waving their flags and watching us as we slowly go by, two abreast, the line stretching for miles and miles.

Once we arrive in the city we gather in the Pentagon parking lot and wait for the official “Ride To The Wall” to begin. The crowd is made up of Business Owners, Doctors, Lawyers, Construction Workers, Retirees, Cab Drivers, Firemen, Policemen, Housewives, Realtors, young people and old people, Republicans and Democrats. There are no fights, no disturbances, no drunks, no stolen purses. There is however, a pervasive sense of gratitude and solemnity that is apparent on the faces of all those around you. At the end of the day we gather up our stuff, (trash included), and leave the city headed for our homes. Some will have to travel all the way to California to get home, some to Florida, some to probably every other state in the union.

When my wife and I get home we always watch the evening news to see how they report on the event. Of course it goes without saying, the 4-5 seconds of news coverage we get consists of one small shot of a few moving motorcycles and then the leader of Rolling Thunder shaking hands with the President. There are no interviews with any of the riders or the spectators to ask them why they participate in the annual “Ride To The Wall.” There are no helicopter shots to show the viewing audience the motorcycle riders staged in the Pentagon parking lots waiting for the “Ride To The Wall” start. There is never an interview with a Police official or other government person to tell us how the city prepares for this event, or how it has grown over the years, or how this event compares to other similar sized events held in the city. It is at the end of this day, after yet another disappointing showing on the part of the national news media that I wonder, how much coverage would we have gotten if there were 30-40 of us gathered on some street corner with protest signs cussing at our government and chanting God ______ America? My 55 years on this earth and my many years of observing the way the national news media works tells me there would most likely be 10 reporters for every single protestor.

I have said my piece and I thank all of the Veterans who have ever served for giving me the freedom to do so. I, we, owe you all a debt that can never be repaid.

I have pasted below a few pictures from the day:

What Do Business Brokers Do? (excerpted from Volume 8, Issue 13, IBBA Weekly Communication for April 8, 2008)

Shari Bayne, CBB, CBI
Vanguard Resource Group, San Diego CA
Over the years, I’ve run into many women who are intimidated by the fact that the majority of business brokers are male. They seem to think that just because they are female, they are at a disadvantage in business brokerage. As a result of this widespread point of view, “Women’s Forums” have been formed in both IBBA and CABB; forums created, I guess, to help us poor, disadvantaged female brokers compete with the vast army of bullying male business brokers.

Enough of this nonsense. Is business brokerage really different for women than for men? I’ve given this much thought, and after looking back at my experiences in this industry, I’ve come to the conclusion that women actually possess more innate skills for successful business brokerage than men do.

I’ve been asked by many people, what it takes to be a successful business broker. We all know there’s no college degree that you can obtain for this career, so what does it take to be successful? By looking at what we do every day, we can get insight into what it takes to be successful. Here’s my list of what a business broker does:

Prospects for listings

Presents brokerage services to business owners

Assists the business owner with appropriate pricing

Lists the business for sale

Prepares a professional offering package to marketplace

Interviews and qualifyies potential buyers

Presents the business to potential buyers

Assists with an offer to purchase

Helps the business owner to evaluate offers

Organizes the due diligence process

Follows through to a success closing and transfer

To sell a business, the broker must first find a business owner who wants to sell; convince the owner that they have the ability to assist them; help the owner price the business; prepare the marketing package; and, then market the business to prospective buyers. When a buyer has been identified, the broker should be able to assist the buyer and seller in the negotiation of a purchase contract and assist both parties in the due diligence and closing procedures. All of this can be done successfully if the broker has the ability to listen to and understand the motivation of both the seller and the buyer. And ladies, let’s face it, we are the communication experts. While our male counterparts may be able to grunt and groan out the latest scores in the NFL better than we can, we are the masters of person-to-person talk.

So, since we know we’re the best communicators out there, let’s look at the entire skill set needed for business brokerage to see if we lack anything in other areas. Here’s my list of needed skills:

Sales and marketing skills

Persistence

People skills (communication, empathy and listening)

Problem solving

Honesty and trustworthiness

Organization skills and attention to details

Life experiences and a willingness to learn

Every broker should implement a marketing plan to target potential business sellers, and persistence in required; the phone won’t ring simply because you have made the choice to become a business broker. If there are problems with the business, the broker should be able to understand them fully to ascertain whether or not these problems can be overcome. The broker should possess the quality of honesty, and use it to confront issues and resolve them. And, finally, all successful business brokers must have organizational skills and be able to pay close attention to the details of any deal.

No offense, men, but I think that the typical woman in business excels in persistence, honesty and organizational skills.

It’s also certainly true that a successful business broker should have a background in business ownership, business management, business financial management and/or business sales and marketing. Fortunately, our society has given us women many opportunities to gain these business skills over the years. And, in addition, there numerous opportunities for anyone - male or female - to get training in key areas of business brokerage through CABB and IBBA. So, if you are a woman who might has excellent sales and marketing skills, but don’t know much about business financials or business management, the doors are open for you to get training.

So in closing, I have just this to say: Ladies, start your engines! Let’s go out and show the industry how good we are at being successful business brokers.

This article was excerpted from the blog ran by Richard Parker of Diomo Corporation. It makes a great deal of sense.

You can send Richard your questions or otherwise contact him by visiting the Diomo Corporation website and clicking on “Contact”.

Using - The B.O.S.S. Theory - to Quickly Evaluate a Business
It is often difficult in the early stages of reviewing a potential opportunity (especially for first-timer business buyers) to really determine if it is a good business. There may so much information to digest in some cases that it becomes overwhelming, while with other listings, the complete lack of any comprehensive detail makes the task almost impossible.

Having purchased ten businesses, I have developed a regimented set of guidelines (’The B.O.S.S. Theory’) that I follow that allows me to quickly access any opportunity. While my rules may not be completely applicable to you, they will, nevertheless, provide you with an excellent idea of how to go about the review process.

Before going into the specifics, it is important that any buyer understands that you must divide your evaluation in two distinct compartments. The first is the undeniable data, or what I like to call the ‘deal facts’. These are all of the parts that are black and white.

For example, the financials of a business fall into this category. Although there may be some discussion or debate regarding add-backs, numbers don’t lie. It is plain old mathematics. There’s no gray area, or shouldn’t be. Another example would be licensing: if the business requires a specific skill-related license that you must hold (i.e. engineering degree, general contractor license, etc.), or having a government license of sorts, then these are again black and white issues that are simple to evaluate.

The second compartment is actually the bigger issues that come into play in all of the gray areas where ‘The B.O.S.S. Theory’ can helpful. When I look for a business, here’s what I want in place amongst the less than obvious attributes:

Bland – Means it ‘flies under the radar’ and is less vulnerable to mass competition
Operationally Sound – Fundamentals in place (not a turnaround)
Sustainable – No looming threats that could impact the historical financials
Scalable – Identifiable growth opportunities.

Here are the more descriptive points of each:

Bland

I am not a fancy guy. I like plain vanilla businesses. The more bland, boring and un-sexy it is, the happier I am. These businesses generally attract less attention (competition and otherwise) and you can plod along with great results and effectively build them while nobody is looking. Further, they generally slip by the average business-buyer who tends to look for ‘hot’ industries or glamorous businesses. I have always subscribed to the notion that I don’t need the fame; I need the money.

Operationally Sound

One of the greatest aspects to buying a good existing business is that you will immediately benefit from having all of the necessary fundamentals in place. Ideally, you should get the keys on Monday and take a paycheck on Friday. With a good existing business, the infrastructure is in place. There are trained employees, functioning systems, reliable suppliers and a stable of customers. The phone will ring as soon you open the doors and the business is already humming. In other words, it is the complete opposite of a start-up and that is precisely what you want.

Sustainable

When you buy a good existing business, a great part of the allure is being able to count on the continuation of the past historical financial activity and profitability. That is exactly why the purchase price will be a multiple of that figure. You want to be certain that there are no known looming threats that can adversely impact the numbers. You want them to continue at least at the recent levels and definitely not decline.

Common examples that can influence the past financials can be customer concentration issues where a disproportionate amount of volume rests in the hands a few clients or a business that relies heavily on location to drive its revenues yet there is a short lease that cannot be extended.

In the former example, if one or two of the customers stop buying, the business can face a massive and potentially unrecoverable situation. Likewise with the premises, if you can’t continue to occupy a location long-term that drives customers through the door, you may be out of business very quickly after getting into it.

Scalable

While it is crucial to have a sustainable business model to build upon, you want to identify and exploit realistic growth opportunities. These are not the ‘pie-in-the sky’ ideas that many delusional business buyers imagine. You want to be satisfied that there are concrete initiatives you can take to grow. For example, opening up a second location, expanding the product line, or acquiring other complimentary businesses. These are real objectives.

Do not get lulled into believing all of the wonderful recommendations the seller presents that may make it seem easy to grow. They may suggest you hire more salespeople, attend trade shows, advertise more or other ‘brilliant’ ideas. While some may be good, the truth is they have likely attempted most of these things or if they are so easy why haven’t they done it? It may very well be that growing the business is not as simple as they may articulate.

On the other hand, if you subscribe to ‘The BOSS Theory’, then identifying and acquiring a good business that can become great with you as the owner, is a lot less difficult that you may imagine. You can send Richard your questions or otherwise contact him by visiting the Diomo Corporation website and clicking on “Contact”.

Help Wanted:

Internship: Junior Associate

DESCRIPTION:

King & King Business Advisors is seeking a home-based intern to support experienced deal-makers with client marketing, research, and documentation tasks. To accomodate initial orientation and training intern candidates should reside in the Washington-Baltimore area.

Interns will assist the firm’s professionals involved with evaluation, marketing, and negotiation of seller client
engagements and buyer representation projects. This position would be excellent experience for a qualified student seeking a career in investment banking, financial business management, or business valuation analysis. The intern’s primary career focus should be business finance, not accounting or administration.
Other tasks will include maintaining client and prospect database records and file content, and supporting various levels of Seller and Buyer research projects.

Tasks involve critical activities which can have an impact on the success of a business buy/sell
(merger or acquisition) transactions. The intern will gain exposure to a very wide variety of business and industry environments and to the mid-market merger and acquisition industry.

QUALIFICATIONS:
• Minimum of three years’ college completion
• Currently enrolled in business, finance, entrepreneurship and/or law curriculum
• Understanding of business finance; financial statements and analysis and enterprise valuation concepts
• Excellent business English communication skills: verbal and written
• Strong telephone personality and usage skills
• Intermediate to advanced computer skills requiring MS Word, MS Outlook and MS Excel.
• Strong internet research skills
• Maintenance of strict confidentiality and ethics standards
• Previous work in a professional environment conforming to professional conduct standards.
• Use of written & electronic communications media to communicate with clients and customers effectively

Length of internship: Six (6) weeks
This is a part-time non-paid intern position.

Contact:
James M. King, President
King & King Business Advisors
(410) 303-6378
jking@KingandKingLLC.com
Application Method: Telephone or ― via Email to:

I encourage all of you who are interested in buying a business to check out the information on SBA loans that can be found on the Small Business Development Center Network website http://www.sbdc-wmd.com

Below you will find some information on the Low-Doc SBA loan program.

King & King can help you find the right business and get it financed.

SBA’s LOW-DOC PROGRAM

Deals Under $150K
Principals can not have any Police Record
Guaranty Fee - 2-3% of Guaranty Amt - paid by Customer (can be financed)
No Set Equity %
Can’t use for refinancing old debt
2 Page Application
SBA agrees to notify the bank of approval/denial within 3 days of submission
Documentary Requirements still require Proformas, Personal Financial Statements, and Tax Returns
Bank Initiates Request to SBA - Bank Must Be “On-Board”
Interest Rate Charged - Bank’s Market Rate with the following caps:
7 yrs & up - NY Prime plus 2.75%
Less than 7 yrs - NY Prime plus 2.25%
Loans under $50K may carry a higher Interest Rate

For more information please call us or send an email to jking@kingandkingllc.com.

We have openings for business brokers. We will train you for your new career in business brokerage.

King & King can help you to use the Patriot Express program to achieve your entrepreneurial goal to purchase a business. If we don’t have your business in inventory we will coop with other brokers to find you a business or we will launch a direct mail/telephone campaign to find you a business to buy. If you have a business for sale we will market your business to Patriot Express candidates. Read this article below from the Office of Small Business Administration:

SBA’s Patriot Express Loan Initiative Over $100 Million and Counting

More Than One Thousand Loans Go To
Military Service Members, Veterans, and Spouses

WASHINGTON, D.C. – In the eight months since its launch, the U.S. Small Business Administration’s Patriot Express Loan Initiative has produced 1,007 SBA guaranteed loans amounting to more than $100 million, with an average loan amount of nearly $101,000, the SBA announced today.

“Each day sees the number of Patriot Express loans rise and the number of participating lenders, currently more than 773 nationwide, rise as well,” said
SBA Administrator Steve Preston. “We thank these lenders, and those coming
aboard, for their special efforts on behalf of entrepreneurial veterans and others in our military community.”

The Patriot Express initiative builds on the more than $1 billion in loans SBA guarantees annually for veteran-owned businesses, and the counseling assistance and procurement support it provides each year to more than 100,000 veterans, service-disabled veterans and Reserve members.

“We have received a remarkable amount of support for Patriot Express from the lending and military communities since we launched the program,” said Preston. “It is important for us to continue to support our servicemen and women. I am particularly appreciative of the news media’s efforts in big cities and small towns alike, to get the word out on this vital program that helps vets and our military community as it grows day by day.”

Patriot Express is a streamlined loan product based on the agency’s highly successful SBA Express Program, but with enhanced guaranty and interest rate characteristics.

Loans are available up to $500,000 and qualify for SBA’s maximum guaranty of up to 85 percent for loans of $150,000 or less and up to 75 percent for loans over $150,000 up to $500,000. For loans above $350,000, lenders are required to secure all available collateral to back the loan and may obtain collateral for smaller loans depending upon individual bank requirements.

Interest rate maximums for Patriot Express loans are the same as those for regular 7(a) loans: a maximum of Prime + 2.25 percent for maturities under seven years; Prime + 2.75 percent for seven years or more. Interest rates can be higher by two percent for loans of $25,000 or less; and one percent for loans between $25,000 and $50,000.

Patriot Express is available to military community members including veterans, service-disabled veterans, service members leaving active duty, Reservists and National Guard members, current spouses of any of the above, spouses of active duty members, and the widowed spouse of a service member who died during service, or of a service-connected disability.

The Patriot Express Pilot Loan Initiative can be used for most business purposes. Details on the initiative can be found at www.sba.gov/patriotexpress.

Patriot Express loans have been approved in all 50 states, the District of Columbia, the U.S. Virgin Islands, Puerto Rico and Guam and currently range from $5,000 to $375,000 in individual loan amounts. After loan applications are approved by the bank, they are submitted to SBA for approval. Most applications are approved by SBA within 24 hours.

# # #

Editor’s Note:
1. Web-based press kit:
http://www.sba.gov/patriotexpress/SBA_PATRIOT_PRESS_KIT.html.

2. List of Approved Patriot Express Lenders:
http://www.sba.gov/idc/groups/public/documents/sba_program_office/bank_hig
h_paatriotexpress_06.xls

Pasted below you will find an article written by Leo Vidal, JD, MA, CPA regarding the EquityAccess program:

By: Leo J. Vidal, JD, MA, CPA

What are the biggest obstacles to closing the sale of your medical practice? In my experience it comes down to not just price but finding a buyer willing and able to pay what you want to receive in the sale. Related to this is the buyer’s ability to come up with the capital and financing needed to make the purchase at the price you want. (This is especially difficult for young professionals burdened with debt from student loans, buying a home, etc.)

The EquityAccess program solves these problems and others that arise when trying to sell a medical practice. EquityAccess provides medical professionals a potentially tax-free sale of their practices. Once the EquityAccess program is put in place, finding a buyer and closing the sale are almost foregone conclusions.

Top Three Problems the EquityAccess program solves for medical practices:

1. Security: replaces an installment sale of the medical practice with a secure asset for retirement and estate planning.
2. Ownership transition: provides economic efficiencies in transitioning practice ownership which insures the highest possible after-tax proceeds from the sale.
3. Easy Financing: provides financing for practice ownership transitions without limiting the buyer’s ability to finance ongoing working capital needs, nor requiring large amounts of capital upfront.

Monetizing the value of the medical practice

EquityAccess is a way for medical practitioner to monetize the value of the practice, i.e., to turn a non-liquid asset into money. This money can then be used to provide a secure financial future for the business owner and his or her family. It can provide securitized tax-free retirement income as well as achieve all of the professional’s estate planning objectives.

The unique features of EquityAccess include:
1. Superior turn-key lending terms, put in place before the sale
2. Customized tax planning, leading to potentially a tax-free sale
3. Customized retirement planning, including tax-free income for life
4. Customized estate planning, with maximum after-tax wealth transfer
5. Efficient access to business equity to achieve succession planning

Keep checking back on this blog for follow up information on this exciting program such as:
Financing the sale
Summary of benefits of EquityAccess
Finding a buyer is easy
Setting the purchase price
Interest-Only loan need never be repaid
No business personal assets are used as collateral
Sale proceeds are insured against loss
Sale proceeds are not subject to income tax
Example-Selling a dental practice

King & King Business Advisors is proud to announce that we have been chosen by Leo Vidal Financial Consulting as their exclusive partners for the purposes of bring this exciting new concept to the market.

Bethesda, MD — Working with a local expert, Leo Vidal Financial Consulting, King & King Business Advisors and EquityAccess have teamed to bring business owners an entirely new concept that works like a “Reverse Mortgage” for business owners to unlock the equity value trapped in their businesses.

Additionally, this new “turn-key” program gives business owners and professionals, (physicians, attorneys, dentists, CPA’s, etc.), unprecedented capital gains and income tax benefits. The program is called Equity Access, the selling owner is allowed to exclude the value of the business from his or her income taxes.

“The key is how the sale is funded and structured,” said Mr. Vidal, a former Regional Tax Director with the CPA firm Deloitte & Touche. “My firm will structure and finance the transaction to give the business owner maximum tax benefits, and several other key financial benefits as well.”

For example, Mr. Vidal explained, his firm provides financing which does not require the buyer to borrow any money. In some cases the buyer does not need to have any cash at the closing. “This allows for the sale to young professionals, management team members or relatives who want to buy the business but don’t have either the capital or the borrowing capacity,” said Mr. Vidal. “It opens up an entire new category of potential buyers for business purchases,” he said, “which is really important today when we are having a global credit crunch and banks are getting very strict on loan standards.” He noted that the program is ideal for professionals such as physicians, dentists, CPAs, and lawyers who are looking for someone to purchase their professional practices.

“It’s the best program I’ve ever seen for a business owner to convert business equity into safe and secure tax-free retirement income. It’s also a fantastic way to pass on maximum wealth tax-free to heirs,” Mr. Vidal said.

According to Mr. Vidal, the Equity Access program has the following benefits:

1. Provides financing for a buyer who does not have adequate capital and/or borrowing capacity to purchase the owner’s business. (The seller sets the financing terms).
2. Gives the business owner the ability to set the sales price of the business at the level he or she desires, so long as acceptable to the buyer.
3. Allows for up to 100% tax-free sale of the business equity and value.
4. Provides for tax-free investment interest on the proceeds of the sale which are re-invested in the program.
5. Provides for tax-free retirement income payments (or other withdrawals) to the seller.
6. Protects the value of the business equity from the claims of creditors.
7. Provides for the value of the business to be passed on to heirs income tax-free (sometimes estate tax-free also).
8. Insures the seller against any losses on his or her re-invested equity.

King & King is making available a free consulting analysis and feasibility report for any interested business owner. To learn more about unlocking the trapped equity in your business or how to sell your business tax free, call Jim King at (410) 303-6378, or (888) 565-6468, or email Jim at jking@kingandkingllc.com.