FREQUENTLY ASKED QUESTIONS

Q. Who is buying businesses?
A. Seventy percent of our buyers are first time buyers, largely out of corporate America. With corporate instability and the weak performance of the stock market, many successful executives have decided to reinvest their significant investment portfolios into themselves by buying a business. Investment groups, corporate acquisition specialists and professional buyers represent the other thirty percent.

Q. Should I sell (buy) the assets or stock of the business?
A. Most businesses today are sold as asset sales instead of stock transfers. This makes for a clean split and permits certain identified assets such as cash in the bank, vehicles, life insurance policies, etc. to remain with the seller. Payment of existing liabilities remains negotiable between buyer and seller.

Q. What factors are considered when a business is valued?
A. Of course profitability and the potential of profit is critical but other items remain important. Annual earnings, recasted financial statements, value of assets, location, products of services offered, customer loyalty, goodwill and other intangibles are all part of the valuation analysis.

Q. What are recasted financial statements?
A. Recasted financial statements provide a more accurate representation of the true benefits the business provides the owner. Discretionary expenses, depreciation and other accounting debits are added back to the net profit to better reflect the cash available to the owner.

Q. What detailed information will DiveShopsForSale.Com include in its confidential listing presentation beyond what is reflected in the basic listing?
A. Our presentations include business activity, customer base, history, sales and earnings, recasted financial statements, intangible and goodwill values, marketing strategy, employees and management team profiles, facility description, lease comments and an explanation why the owner is selling. Also incorporated into the comprehensive sales package are the price, down payment requirement, financing options and other pertinent deal points.

Q. How do payment terms influence the sale price of a business?
A. The amount of cash required in relation to the amount of owner financing significantly influences the final sale price. Generally an all cash deal results in a reduced purchase price while a transaction that includes some amount of owner or outside financing tends to promote a sale price at the high end of the market value spectrum. Sellers requiring 100% cash down payments with no possibility of some owner financing dramatically limit the number of potential buyers. The use of owner financing generally helps defer taxes and provide the seller another source of income through above market interest charges. .