Megabite Restaurant Brokers SOLD our Viceroy Indian Restaurant

Megabite Restaurant Brokers, representing the Seller, recently transferred ownership of a successful Indian restaurant in the North Plano Frisco Texas market.

“Thank you for quickly finding a great buyer at a great price.  I am ready for retirement!”, said Amarender Reddy, the Seller.  Amarender was quickly presented with several buyers.  He recently completed the transition training with the new owners and wishes them every success !

Top 5 Reasons to Sell a Restaurant

If you are a restauranteur, then you already know the two HAPPIEST days in an restauranteur‘s life: the day you START or BUY your business and the day you SELL your business. Sadly, many owners wait until they MUST sell due to economic or emotional reasons. Anxiety can force you to accept an offer that simply is NOT GOOD for you.

1) Illness or Death. This is by far the most common reason to sell a restaurant and it is, sadly, a very unhappy one! Ill health (either our own or that of our loved ones) has a sobering effect on us. We tend to immediately realign our priorities.
2) Desire to ‘Cash out’. When most of our personal wealth is tied up in our business, the prospect of a sale offers an opportunity to convert our holdings into cash, diversify our investments and enjoy our newly liquid resources.
3) Anxiety. There are tremendous rewards in the ownership of a restaurant. Unfortunately, personal stresses can accumulate over a long period of time. The list of stressors is extensive: difficult employees, theft, tight deadlines, making payroll, personal financial guarantees, taxes, complying with health inspections, reinventing your restaurant concept, …. There is a point where the stress hits OVERLOAD, we feel saturated and need to sell!
4) Retirement. Although many entrepreneurs never consider this possibility, the inevitable problem of age emerges. The secret is to find the optimal timing so that the sale happens at a time of our choosing.
5) Burnout. After living on the edge for years, many entrepreneurs simply burn out and look to forward to reducing the incessant pressure. They choose to pursue other interests that challenge their knowledge, skills and ability. Selling their restaurant can pave the way to new professional and personal opportunities

Megabite Restaurant Brokers can help you buy, sell or value a restaurant, bar or nightclub business? You can discreetly and confidentially contact a broker at Contact Us, read other testimonials at Client Testimonials, search buyers at SEARCH OUR BUYERS or research more info here if you just want to understand how to SELL A BUSINESS.  Thinking of selling:  Contact us TODAY to Sell your Business

For more information, Contact Megabite Restaurant Brokers, LLC
Phone: (817) 467-2161   www.megabite-rb.com 

Why Banks Ask for a Personal Guarantee Before a Loan

By Sherri Goodman | October 4, 2016

It’s a common scenario: You have a thriving business, and it’s doing so well that you believe it’s time to expand. That expansion requires more money, and, of course, increases your risk of failure. But you have studied your options, talked with advisors, and everyone agrees it’s a smart and potentially lucrative move.

Your bank has been there with you from the start. They know you, your integrity, and the way you run your business. So when your bank requests a personal guarantee to borrow money for your business, it can be upsetting. Why do they need a personal guarantee on this loan? Is it a reflection of the bank’s assessment of my business or my plans? Does it mean the bank doesn’t think my business is worth the risk?

The quick answer to all of those questions is no. It’s common for banks to request a personal guarantee before making small business loans. It’s reassurance that you, the business owner, are willing to assume more risk to assure your business’ success.

It’s Not Personal

Personal guarantees on loans to small businesses (i.e., businesses with valuation of up to $25 million), while typically required, became the norm as states enacted legislation introducing new corporate structure options such as the limited liability company or LLC. Unlike a sole proprietorship or general partnership structure, the LLC shields owners and investors from personal financial responsibility for the business’ debt.

The advent and popularity of the LLC among small business owners prompted bankers to definitely require personal guarantees from owners.

“It’s understandable that you want to limit your liability, but we have to ensure the owner stays very involved and engaged. He or she is the key figure, and the most valuable asset of the business, and as the bank, we want to keep the owner motivated and involved,” says BBVA Compass Director of Credit Risk – Small Business David Peacock.

At most small businesses, the owner is the CEO, the face, and the visionary of the business. The owner knows the customers and vendors, the employees and community, and the opportunities and risks.

If a small business defaults on a bank loan, it’s difficult to find another CEO with the needed specific skill set that the bank can hire to keep the business going, says Tommy Crawford, Director of Business Loan Underwriting at BBVA Compass.

“The CEO is absolutely the key to the success of the business, and a personal guarantee increases my confidence in the CEO and in the company,” Crawford says.

SBA Loans Require Guarantees

Personal guarantees are required by some government-backed loans. For all SBA loans, personal guaranties are required from every owner of 20 percent or more of the business, as well as from other individuals who hold key management positions.

BBVA Compass typically requires an unlimited personal guarantee from an owner or CEO, which provides additional protection to the bank for collecting existing and future debts, says Credit Manager David Battles. In some cases, where ownership is dispersed among a number of different owners — such as a large law firm or medical group, for instance — the bank will consider and sometimes accept a limited guarantee shared by all business partners, says Battles.

“In most cases, customers understand why the bank requires a guarantee,” says Battles. “They understand it’s simply a part of doing business.”

This article was written by Sherri Goodman.  Birmingham-based Sherri Goodman was a print journalist for 15 years, writing and editing for daily newspapers in Alabama, New Mexico, Georgia, and Utah, and The Associated Press in Texas and Georgia. She also has worked in media relations and communications for companies in the banking, energy, and automotive sectors. 

For more information, Contact Megabite Restaurant Brokers, LLC
Phone: (817) 467-2161
www.megabite-rb.com 

How can Megabite Restaurant Brokers sell your restaurant, bar or nightclub business? You can discreetly and confidentially contact a broker at Contact Us, read other testimonials at Client Testimonials, search buyers at SEARCH OUR BUYERS or research more info here if you just want to understand how to SELL A BUSINESS.

SBA Loans Tips – Do’s and Don’ts

By Sherri Goodman | December 14, 2016

Ready to grow your small business?

An SBA loan can help you accomplish your goal and may result in more favorable terms, such as a longer loan life and lower equity requirements. But because it is backed by the federal government, applicants need to be ready to play by the rules so that the process goes smoothly.

Daniel Walsh, Vice President and Senior Corporate Relationship Manager with BBVA Compass, offers these do’s and don’ts when it comes to applying for an SBA loan:

Do

• Seek out an SBA preferred lender. The designation means the Small Business Administration has a comfort level with the lender and that matters, Walsh says. “It allows the lender to make a final credit decision without sending the request to the SBA for a decision. SBA preferred lenders have an earned level of confidence.”
• “Have your documentation in order,” says Walsh. “There can’t be anything missing.” You should be ready to hand your loan officer three years of business financial statements and tax returns, a personal financial statement, a statement of personal history, your business plan, and articles of incorporation, if applicable.
• Get your financial house in order. Make sure your financial statements include a profit and loss statement, projected financial statements, ownership and affiliations, business certificate/license, loan application history, business and personal income tax returns, your business lease, and résumés for all the principals.
• Proactively explain unusual events and growth projections. Did your business suffer a dip in sales one year?  Spell out why and how it happened. Does your forecast include a dramatic jump of revenue? “Explain the reasoning behind your projections and your confidence level, says Walsh. “Don’t expect your banker to be able to fill in the blanks.”

Don’t

• Rule out the SBA loan option. “Talk to a banker, check into it. A lot of times companies don’t realize they can qualify for it,” he says. Also some businesses may question whether the documentation requirements are worth the extra steps, even if they can qualify for a traditional loan. “If your business has been renting and you are thinking of buying, you could amortize that loan for 20 years with traditional financing. With an SBA loan, you could amortize it over 25 years, which helps improve month to month cash flow,” he says.
• Balk at the request for a personal guarantee. “It’s 100 percent required,” says Walsh. “It’s reassurance that you, the business owner, are willing to assume more risk to assure your business’ success.”
• Let the documentation requirements discourage you. “It’s a wonderful product that we can offer that provides much more flexibility and much less reporting requirements long term,” says Walsh. “While it may appear stringent up front, it is often well worth your while.”

This article was written by Sherri Goodman.  Birmingham-based Sherri Goodman was a print journalist for 15 years, writing and editing for daily newspapers in Alabama, New Mexico, Georgia, and Utah, and The Associated Press in Texas and Georgia. She also has worked in media relations and communications for companies in the banking, energy, and automotive sectors. 

For more information, Contact Megabite Restaurant Brokers, LLC
Phone: (817) 467-2161
www.megabite-rb.com 

How can Megabite Restaurant Brokers sell your restaurant, bar or nightclub business? You can discreetly and confidentially contact a broker at Contact Us, read other testimonials at Client Testimonials, search buyers at SEARCH OUR BUYERS or research more info here if you just want to understand how to SELL A BUSINESS.

2017 M&A Trends for Sellers

By Meghan Daniels, Axial | December 15, 2016

For business owners, the New Year is an ideal time to reflect on long-term goals for your organization. A banker can provide valuable insight on trends in your industry and the market as a whole.

We talked to George Shea, Managing Partner at Focus Investment Bank, and Keith Dee, Founder and President of Osage Advisors, about a few of their insights for M&A going into 2017.

For those looking to explore a transaction in 2017, “my biggest advice is to begin thinking long before you execute, whether you do it on your own or hire an investment banker,” says Shea. “Make sure you have your financial house in order and understand the key metrics of your business — you should be able to slice and dice your financial information quickly and efficiently.”

3 M&A Insights

1. “Search funds have proliferated the lower middle market.”

Search funds typically comprise individuals who are looking to buy and then operate a company (usually one smaller in size than the typical target for a private equity firm). “There were a handful of search funds five years ago, and now they’re everywhere,” says Dee. “When a business does not fit the overall objectives of either a strategic buyer or private equity fund, search funds provide a viable option for owners looking to sell their businesses.

Promoted as part of top MBA programs, “they’ve become a generational trend for young entrepreneurs who want to buy a business and who have an investor base backing them up.” He notes that search funds tend to be conservative when it comes to valuations — he estimates 90% will be below strategics or even private equity — “because they will become the owner-operator of the business and have to go back and sell the deal to their investors who write the checks for them.”

2. “Private equity is going upstream.”  

“I’ve found equity investors are less interested in small add-ons unless they meet very stringent investment criteria,” says Dee, who typically works with companies between $1-$5 million in EBITDA.

“This is especially true for sub-$2 million deals, an area they were much more aggressive in a couple of years ago. With the money they’re raising now — half billion dollar funds vs. quarter billion dollar funds — it might not make sense as they are looking to deploy more capital per transaction.”

This may mean smaller companies looking to sell turn to strategic buyers, search funds, or independent sponsors (also on the rise).

3. “It’s still a seller’s market.”

We’re not at the peak of the seller’s market yet, according to Dee. “There’s so much money in the lower middle market, and even more being raised on the equity side. Equity investors and strategics alike are all looking for quality deal flow. It all comes back to supply and demand. It continues to be a seller’s market due to a short supply of quality companies, and I’m not sure when the pendulum will switch to a buyer’s market.”

“Timing is everything,” he adds. “You always want to be selling on an uptrend. You don’t have to be selling at the top of the market, but you do want to be selling on positive trends both in terms of sales and EBITDA.”

3 Industry Trends

1. “The precision machinery industry is hot.”

This is particularly true in the aerospace markets, says Dee. “We get a huge number of inquiries from buyers, both private equity and strategics, looking for aerospace-related businesses. The trend has been constant through 2017 and we expect it to continue into 2017.

“This is partly because large manufacturers like Boeing and GE are gearing up for big projects in the next 20 years. Just as important though is the human capital component — buyers are looking for talent. A highly skilled labor force is difficult to find right now. In addition, larger companies have reached capacity in their own facilities and are interested in acquiring smaller companies that may not be at full capacity.”

2. “Infrastructure, energy, and defense companies might want to wait and see on M&A.”

Dee predicts that due to the new presidential administration, “infrastructure, energy, and defense-related companies will likely see a bounce of work not next year, if not next year, certainly in 2018 or 2019. The question for sellers is, does it make sense to wait to see how it plays out? That’s a personal choice you have to make.” Dee notes that older business owners may be better off initiating a deal process rather than playing a waiting game. “If you’re a couple years older, you may find yourself in a more vulnerable position and there may be other concerns that come into play.”

3. “Buyers continue to reward recurring revenue in IT services businesses.”

“At every level of the IT services industry, buyers are rewarding recurring revenue. This is a global trend we’ve been seeing,” says Shea, who specializes in software and IT services companies. “Buyers are paying much higher premiums to companies that have shifted to recurring revenue vs. project-based.” 

For more information, Contact Megabite Restaurant Brokers, LLC
Phone: (817) 467-2161
www.megabite-rb.com 

How can Megabite Restaurant Brokers sell your restaurant, bar or nightclub business? You can discreetly and confidentially contact a broker at Contact Us, read other testimonials at Client Testimonials, search buyers at SEARCH OUR BUYERS or research more info here if you just want to understand how to SELL A BUSINESS.