cbcorion's blog

What is Due Diligence?

Due diligence is an investigative inquiry into a business that is performed by a potential small business buyer in order to ensure that the business being purchased is everything that has been represented by the business owner/seller.

During a due diligence period, the buyer will have an opportunity to verify the accuracy of financial information furnished to him by the seller and other details of the business for sale.

Small business due diligence can take anywhere from 30 to 60 days, depending on the complexity of the business and the number of moving parts.

How Goodwill Impacts Your Business Value

Since the largest part of the purchase price of a profitable small business is usually goodwill, it is important to have knowledge and understanding of just what goodwill is and why there is value in it. 

Business value is not built solely on the accumulation of tangible assets, such as equipment and machinery, but also on the intangibles, known as goodwill, that contribute to its profitability. The value of a business is determined by its ability to generate cash flow and the risks associated with consistently producing that cash flow.

Magnificent Mile to Main Street – The Transformation of Retail

Everyone’s heard the buzz about the death of traditional brick and mortar and the rise of experiential retail. U.S. retail vacancies were at 10.2% at the end of 2018, a marginal increase from 10.0% a year earlier, according to a report from Reis. Current market trends have challenged retail owners and investors with vacancies in retail spaces from areas like Magnificent Mile and Fifth Avenue as well as on Main Street.

Rules of Thumb

There are situations that justify a quick and easy business valuation based on Rules of Thumb, rather than a lengthy and costly business valuation.  To apply Rules of Thumb, the first step is to determine seller discretionary earnings (SDE).  This is calculated by adding back certain non typical expenses as well as non cash expenses to the net operating income.  This calculation is the first and most important step when valuing a business and should only be attempted by an experienced business broker.  A miscalculation of SDE will produce an inaccurate business valuation.

4 Not-So-Obvious Reasons Why Warehouses are Hot Investments Right Now

Vacancy rates are at all time lows. Absorption rates are at their highest and the “industrial sector has outperformed all other property types with double-digit total returns” according to the Integra Realty Resources 25th annual Viewpoint report covering the commercial real estate industry.

The obvious reason behind this surge in investor excitement about warehouses is the growth of e-commerce, but that’s not the only reason. Here are 4 not-so-obvious reasons why warehouses are hot investments right now.

4 Reasons Senior Housing is Interesting to Investors

While senior housing has always been a profitable industry, it has really been able to stand on its own two feet recently as a viable and significant class of real estate – with more and more outside investors jumping on board and adding senior housing to their portfolios. In a recent survey conducted by the National Investment Center for Seniors Housing and Care (NIC) and National Real Estate Investor (NREI), senior housing was once again the most attractive real estate asset class when compared to a host of other commercial real estate classes, including industrial, hotels, multifamily housing, office and retail, and more.

Numbers used to Evaluate a Potential Real Estate Investment

Evaluating a potential real estate investment is no easy task, and there are a number of things for investors to consider. Two of the metrics commonly used are the capitalization rate (both at purchase and estimated at sale), and the internal rate of return objective. Both measures can be useful evaluation tools, but it’s important to understand exactly what they measure and why they’re important.

Capitalization Rate

Risks and Realities of the Contract for Deed

While contracts for deed offer some advantages over a traditional mortgage, such as speed and simplicity, they can offer advantages and disadvantages.  In a contract for deed, the purchase of property is financed by the seller,  rather than a third-party lender such as a commercial bank or credit union. The arrangement can benefit buyers and sellers by extending credit to buyers who would not otherwise qualify for a loan. 

I've owned a business for many years and would like to sell it. How do I start the process?

First of all, Assemble a 'team' of professional advisors that would represent your best interest in the transaction. Your team should include an experienced business broker, an attorney and a CPA. There are many considerations in the sale of a business and each professional would lend their expertise. You may want to consider a 1031 exchange which would allow you to defer the capital gains tax upon the sale.

Why Grocery Stores are the New “Mall” of Our Era

For decades, large department stores served as the anchor store for malls and shopping centers. The anchor is the main attraction while all of the other retail shops inside of the mall pay the majority of the lease. Without the anchor, the mall dies. With so many big anchor stores closing in malls throughout America, could grocery stores replace department stores as the new “mall” of our era?

Selling Your Business | How to Start the Process

I've owned a business for many years and would like to sell it. How do I start the process?

Commercial Real Estate Matters | Co-Tenancy

I’ve heard that some retailers are going with a co-tenancy program.  What does that mean?