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EP 108: New Changes from the SBA Affecting Buyers and Sellers of Businesses with Ray Drew

Defenders of Business Value

Release Date: 12/13/2023

EP 121: Q2 2024 Deal Stats Report show art EP 121: Q2 2024 Deal Stats Report

Defenders of Business Value

In this episode, Ed Mysogland shares key insights from the latest quarterly Deal Stats report on business valuation trends. He discusses how EBITDA multiples have returned to typical levels after fluctuating during the pandemic. Ed also analyzes sector performance and highlights contradictory trends in private company sales multiples. Learn about typical discount levels, officers' compensation benchmarks, and the lengthy process of selling a business. Ed is available to discuss specific industries and answer questions from business owners. Tune in to get the latest market data and strategies...

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EP 120: Business Valuation Calculator Reviews show art EP 120: Business Valuation Calculator Reviews

Defenders of Business Value

Join Ed Mysogland in a deep dive into the world of online business valuation calculators. Unravel the complexities and limitations of these tools as Mysogland discusses the challenges of applying market data to private companies and highlights the drawbacks of relying solely on digital solutions. Discover the pros and cons of each, alongside insights into their accuracy and lead generation potential. Don't miss Mysogland's expert advice on business valuation methods and structure, and learn how to navigate the intricate world of business deals. Plus, gain exclusive access to valuable insights...

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EP 119: How to Sell when the Business Owner is the #1 Sales Person show art EP 119: How to Sell when the Business Owner is the #1 Sales Person

Defenders of Business Value

One of the primary reasons businesses don't sell is that the business owner is the person with all of the sales relationships. Most buyers have to reduce the value or offer a risk-mitigated structure to get comfortable with the existing owner's role post-acquisition. I often lament about how, as dealmakers, we can address this sooner in the exit planning process. Enter ' President . I had been introduced to her practice by several people who raved about work she had done. I asked her if we could visit about exits and I was taken aback that she was regularly addressing this exact challenge with...

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EP 118: Improvement Tips to Help Make Your Business More Saleable in 2024 show art EP 118: Improvement Tips to Help Make Your Business More Saleable in 2024

Defenders of Business Value

I regularly get asked about how best to prepare a company for sale. The first challenge is time. Most business owners understate how long it takes to get out. The second is what this episode is about - what little things can you do to make your business ready for sale. It takes time, but it is worth it when you enter the marketplace. If listening isn't your thing, the notes I worked on the show are on the website's blog.  ************ About the Show The Defenders of Business Value Podcast combines nearly 31 years of valuation and exit planning expertise working with business owners. Ed...

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EP 117: Planning Your Sale in 2024 show art EP 117: Planning Your Sale in 2024

Defenders of Business Value

Exiting a business is a pivotal moment filled with complex emotional and financial decisions. This podcast episode dives into a structured 5-step plan to ensure a successful and fulfilling exit. We explore the significance of understanding your motivations, aligning your exit strategy with your goals, determining your financial needs, deciding on your post-exit involvement, and utilizing an Exit Matrix to balance financial returns with your desired level of engagement. Whether you're contemplating an exit or already planning one, this guide offers invaluable insights to navigate the transition...

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EP 116: Evaluating Company-Specific Risk: Telescopic Observation show art EP 116: Evaluating Company-Specific Risk: Telescopic Observation

Defenders of Business Value

The "Telescopic Observation" provides an insightful overview of a strategic framework designed to enhance the SWOT (Strengths, Weaknesses, Opportunities, Threats) analysis by offering a more structured approach to examining an organization's internal and external environments. It emphasizes the need for a more focused, inclusive, and systematic methodology to better understand business environments and strategically plan for success. The framework, developed in mid-1999, has been tested across various organizational settings, proving its utility in bringing distant or complex aspects into...

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EP 115: Business Valuation Multiples Update show art EP 115: Business Valuation Multiples Update

Defenders of Business Value

In this fresh episode, we explore the Q4 2023 DealStats Value Index, providing a detailed analysis of current business valuation trends. Notably, we've spotted a significant shift: EBITDA multiples are moving towards a normalized figure, landing at 3.4x in Q3 2023, indicating a stabilizing market. Additionally, net sales multiples have slightly risen to 0.49x. A standout observation is the higher valuations public buyers are assigning to private entities, underscoring the strategic value these acquisitions hold. We also spotlight the sustained interest in the technology and healthcare sectors,...

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EP 114: Does your Business Valuation Help or Hurt Your Chances Selling Your Business? show art EP 114: Does your Business Valuation Help or Hurt Your Chances Selling Your Business?

Defenders of Business Value

In my 30-year journey through the world of deal-making, I’ve had the pleasure of conducting thousands of business valuations and working alongside some of the most talented appraisers across the United States. In this podcast episode, we’re diving into a common confusion in the business valuation process—what you expect versus what you actually get. Most of my work revolves around preparing businesses for sale, and my goal is to ensure that everyone who comes to me for valuation walks away with the insights they need, specifically geared toward selling. Nothing more, nothing...

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EP 113: Tools of the Trade: CIMs show art EP 113: Tools of the Trade: CIMs

Defenders of Business Value

In this episode, we join Ed Mysogland as he explores the crucial aspects of Confidential Information Memorandums (CIMs) in the context of M&A transactions. Ed illuminates their essential role in the smooth execution of business sales. The episode offers an in-depth look at critical components of CIMs, including a detailed business overview, industry analysis, and the nuances of business valuation. Drawing on his extensive experience, Ed provides valuable insights into the importance of understanding a company's customer base, marketing approaches, and internal team dynamics, which are...

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EP 112: Seeing a Business's Future with Adam Hoeksema show art EP 112: Seeing a Business's Future with Adam Hoeksema

Defenders of Business Value

In this episode, Ed Mysogland welcomed Adam Hoeksema, a seasoned professional in the field of financial modeling and business projections. Adam shared his journey from an accounting background to becoming an entrepreneurial force in the financial industry. He emphasized the pivot of his business, Projection Hub, from a subscription model to offering specialized Excel spreadsheet templates and custom financial modeling services.  Adam candidly discussed the challenges and realizations that shaped his business, including understanding market needs and customer preferences. The conversation...

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More Episodes

This week on the podcast, Ed had the opportunity to visit with "SBA Ray" otherwise known as Ray Drew of Fundex Solutions! In this podcast episode, we delve into the recent changes implemented by the U.S. Small Business Administration (SBA) in its lending programs. These changes include two Procedural Notices and new Standard Operating Procedures (SOP) that have a significant impact on the 7(a) and 504 lending programs, with a particular focus on financing change of ownership opportunities.

Here are the key highlights of the SBA’s new SOP and additional guidance:

  1. Equity Injection Changes:
    • Equity injection refers to new cash or assets added to a project not on the borrower’s balance sheet before.
    • For acquisitions resulting in a complete change of ownership, a minimum equity injection of 10% of the total project costs is now required. Seller debt on standby or interest-only can be considered for equity injection.
  2. Employee Stock Ownership Plans (ESOPs):
    • Lenders with delegated authority can now submit ESOP transactions.
    • Loans to ESOPs for purchasing a controlling interest (at least 51%) do not require equity injection.
  3. Partial Changes of Ownership:
    • SBA loans can now fund the purchase of a portion of an owner’s interest.
    • Selling owners can remain involved in the business after the partial change of ownership.
    • Rolled equity from the target company into the new company remains ineligible.
  4. Additional Guaranteed Dollars:
    • Individuals can receive an extra $3.75 million in guaranteed dollars, equivalent to a $5 million 7(a) loan, for acquiring a business not in the same 3-digit NAICS subsector as any currently owned business with existing SBA debt.
  5. Buyer Rebates:
    • Buyer rebates, tied to business performance, are allowed, providing flexibility in deal structures.
    • Helps mitigate risks like concentration, employee retention, and more.
  6. Elimination of Personal Resource Test:
    • SBA lenders no longer need to evaluate the personal resources of loan applicants.
    • Stronger, more liquid borrowers can now pursue SBA financing, offering greater flexibility for multiple transactions.
  7. Reduced Documentation Requirements:
    • The SBA has reduced the amount of documentation lenders must collect to verify equity.

These changes bring significant opportunities and flexibility to small businesses seeking SBA financing, making it essential for entrepreneurs and lenders to stay informed about the latest updates. Tune in to learn more about how these changes could impact your business and financing options. Listen Here

Connect with Ray:

Email: [email protected]
Website: https://fundexsolutions.com/
Twitter: https://twitter.com/SBA_Ray?ref_src=twsrc%5Egoogle%7Ctwcamp%5Eserp%7Ctwgr%5Eauthor
Youtube: https://m.youtube.com/channel/UC7_6-lZHN4cXa0sF6Tu8AGQ
LinkedIn: https://www.linkedin.com/in/raydrew4589

 

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About the Show

The Defenders of Business Value Podcast combines nearly 31 years of valuation and exit planning expertise working with business owners. Ed Mysogland has a mission and vision to help business owners understand the value of their business and make it a salable asset. Most of the small business owner's net worth is locked in the company, and to unlock it, a business owner has to sell it. Unfortunately, the odds are against business owners that they won't be able to sell their companies because they don't know what creates a saleable asset. Ed interviews experts who help business owners prepare, build, preserve, and one-day transfer value with the sale of the business.

 

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For past guests, please visit https://www.defendersofbusinessvalue.com/

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