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American Business Brokers & Advisors Founder & President MERGERS & ACQUISITIONS BUSINESS VALUATIONS
MARCH 2025
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No. 1 Reason Buying and Selling a Business Falls Apart
3. OPERATIONAL DUE DILIGENCE: • Assessing the business’s operations, systems, processes, and management team. • Understanding the business model, customer base, supply chain, and technology infrastructure. • Looking for any operational inefficiencies or areas that might need improvement post-acquisition. 4. MARKET AND COMPETITIVE DUE DILIGENCE: • Evaluating the market position and competitive landscape of the business. • Researching the business’s trends, growth potential, and risks. • Understanding the company's reputation and customer relationships. 5. HUMAN RESOURCES DUE DILIGENCE: • Investigating employee contracts, compensation, benefits, and any potential HR issues. • Reviewing the organizational structure and management team to assess talent and leadership. At American Business Brokers & Advisors, we understand the importance of due diligence and pride ourselves on the fact that we have a 90% percent success rate of business closings. The reason we have such a high success rate is because we understand that when buying a business, the seller always knows more than the buyer because the seller of the business has lived the business for years and has forgotten more about their business than the buyer could ever know in 60–90 days of due diligence; therefore,
You read about this every day in the trade magazines or on social media that someone is buying a business or selling a certain business. Then, shortly afterward, you hear the deal fell apart, or you don’t hear anything and the deal just fades away. A big reason for this is because of what the buyer finds in due diligence. Due diligence is defined as an investigation and analysis a buyer conducts before finalizing an acquisition. The goal is to verify the details of the business and uncover any potential risks or issues that might affect the value, operations, or future prospects of the company being purchased.
we like to start early in the selling process, working with the owner of the business to obtain the information we know a buyer will need to have a successful closing. One suggestion we make to prospective sellers before taking a business to the marketplace is to perform due diligence on their own business. By this, we are talking about having title work run on their convenience stores, which will reveal any issues that will need to be dealt with regarding the real estate. A title search will also reveal any outstanding liabilities that may be on record, known and unknown. All too often, an owner will say their business is clean only to find outstanding UCCs that were not released. (An example of a UCC is what a bank or lender will file when a loan is taken out. A lot of time, the lender fails to record a release, and to make matters worse, the bank that filed the UCC has been sold several times, making it more difficult to get a release.) We also suggest that surveys be obtained before going to the marketplace because, with real estate, a common issue we find is that the convenience store we are selling was built many years ago. Since then, the road in front of the store has been widened, and now, we have the price sign for the store or, worse yet, the tanks of the store located underneath state or city property. I remember being two weeks from the closing for the sale of 35 convenience stores when it was discovered at one of the stores there was a city easement for an alley that went Continued on Page 2 ...
Here’s a breakdown of what due diligence typically involves:
1. FINANCIAL DUE DILIGENCE: • Examining financial statements (e.g., balance sheets, income statements, tax returns) to assess profitability, revenue streams, cash flow, debt obligations, and financial health. • Reviewing accounting practices to ensure they are sound and compliant with relevant standards. 2. LEGAL DUE DILIGENCE: • Reviewing the business's legal structure and ownership (e.g., articles of incorporation, ownership agreements). • Checking for pending litigation or potential legal liabilities. • Verifying intellectual property rights (patents, trademarks, copyrights), contracts, and leases.
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WHAT IS YOUR TRICK PONY?
Having been in business for quite some time and around the block a couple of times, you get to think you have heard or seen just about everything, but the other day, a very successful multi-store operator threw me a curveball. We were talking about a business that he was thinking about acquiring, and right out of nowhere, he looked at me and said: Well, what is their trick pony? I had no idea what he was talking about, so I asked him. What is a trick pony? He said a trick pony is something used to enhance the sales of a business. Now I knew what he was talking about. In marketing, we call it USP, which means what is your unique selling proposition, or in more simple terms: What is your hook? Most successful businesses have a trick pony, a hook, or a USP — whatever you want to call it. For example, one of the most well-known of those was Domino’s Pizza. When Domino’s Pizza first started in
Ypsilanti, Michigan, in 1960, they were just another couple of guys with a pizza place in another college town. To make their pizza place stand out and increase sales, they came up with a USP/hook to set them apart from their competition. Their USP/hook was they’d deliver your pizza hot and fresh in 30 minutes or less, or it would be free. You know the rest of the story because Tom Monaghan went on to sell Domino’s for a billion dollars, and now Domino’s Pizza is probably one of the most recognizable brands in the US. Then there was Federal Express. Fred Smith, the creator of Federal Express, knew he had a great idea with overnight delivery, but again, he needed something to gain market attention in the business community. He, therefore, came up with the “When something absolutely must be there the next day” slogan. These are only a few of the many different USP/hooks that have been used to break through the clutter of customers’ minds and grab their attention. How about you and your store or stores? What is your trick pony? I have seen some convenience stores use soda as a hook: “Any size of soda 59 cents.” Some will use coffee, and some even use bananas. But the point is that every store should have some kind of trick pony; otherwise, what is going to set you apart from the next guy?
Through my travels and meetings with many convenience store owners across the country, I have seen many different stores with fresh eyes.
You may want to take a walk out into your parking lot and look at your store from that angle, as a customer, and actually walk through the sequence of events a customer would and see what they see and try to think what they think. Remember, the customer who frequents your store in the morning is different than the customer who visits your store at noon, as is the customer who visits your store at night, so you really have three different types of customers. The same trick pony may not work for all three of them. Nobody said this was going to be easy, but it will be more profitable for you.
I bet Tom Monaghan of Domino’s and Fred Smith of Federal Express are glad they came up with their trick pony.
–Terry Monroe
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completely reviewed the financials and are assured we have the correct financial information.
through the middle of one of the stores, which was jeopardizing the sale of the entire 35-store package. Fortunately, we were able to get it resolved, but only because the attorney who was representing the seller of the 35 stores happened to be the city attorney for the town. They called a special meeting to address the issue, and the closing occurred on time.
In December 2023, we successfully closed two exceptional packages of convenience stores and wholesale fuel businesses. What nobody knew was that we worked most of 2022 cleaning up the books and records of each business because they could not be taken to the market due to their poor bookkeeping. This is not unusual, which is why a business owner should do financial due diligence on themselves before anything else. Ask themselves, "Would I buy a business where the books and records
Financial due diligence is usually the one item that will kill a deal, which is why we won’t take a business to the market until we have
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SUDOKU (SOLUTION ON PG. 4) Take a Break!
Find out, with just three pieces of information about your business, how we can provide a convenience store operator with a market valuation showing what their convenience stores and businesses are worth in today’s marketplace. Best of all, it costs you nothing and it is entirely confidential. Simply send an email to Terry@TerryMonroe , and in the subject line, put “3 Point Market Valuation” Information is the key to everything. Don’t play a guessing game. Get the information you need. TERRY’S ‘3 POINT MARKET VALUATION’ are incomplete, and it is hard to tell if the business is making money or not? Are the operations of the business inconsistent from one store to the next? What kind of message is the business sending to its customers? Are you, as a business owner, keeping the assets of the business in good working order, or are there potholes in the drive and pumps that are bagged or coolers that need to be repaired?" If the business is not being kept up, you can be assured the buyer will want a discount after doing their due diligence. As they always say, “Pay me now or pay me later,” but you will be paying for poor due diligence when it comes to selling. –Terry Monroe TERRY’S QUOTES OF THE DAY “It is not what happens to you that determines how far you go in life; it is how you handle what happens to you.” –Zig Ziglar “We all have two choices: we can make a living or we can design a life.” –Jim Rohn “If you could find out what the most successful people did in any area and then you did the same thing over and over, you would eventually get the same results they do.” –Brian Tracy
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INSIDE 7824 Estero Blvd., 3rd Floor Fort Myers Beach, FL 33931 1 No. 1 Reason Buying and Selling a Business Falls Apart
Sudoku Solution
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What Is Your Trick Pony?
Discover Terry’s ‘3 Point Market Valuation’
Get to Know Your Customers
Why Putting Customers First Is the Key to Growth ADOPTING THE CUSTOMER- CENTRIC MINDSET
IMPROVE AND GROW Focusing your marketing strategy on customers makes promoting tailored products that respond to customer needs easier. You need to make your brand stand out in your followers' minds, creating new followers and allowing them to contribute while feeling heard and seen. Social media is the top channel for product discovery. However, before customers commit to a particular purchase, they check existing customers' reviews, comments, and testimonials, making customer interactions paramount.
When you think of your customer’s buying journey, do you envision it from start to finish, or do you just focus on the sale? While that end goal is crucial, your marketing strategy needs to get them there. To nurture your customers through the checkout process, you have to put yourself in their shoes and develop your marketing strategy from their perspective from start to finish — an approach called customer-centric marketing.
meets their needs, and if customers see themselves using your product/service.
One way to accomplish this is to meet your customers where they are. According to a 2023 Sprout Social Index Report, 53% of consumers increased their social media usage since the pandemic. Those consumers also desire stronger engagement from the brands they follow or support. HOW CAN IT BENEFIT YOUR BUSINESS? Your customers respond to techniques that appeal to emotions and invite reactions and interactions. This engagement helps nurture a relationship that gives you more information about what customers want and helps them gain trust in your offer.
CREATING LOYAL CUSTOMERS Loyal customers are your biggest
advocates and will continually choose you over competitors. Once you acquire new customers, it’s time to build those connections to create loyalty by reflecting their needs and values in your marketing campaigns. Customers who love a product or service stand by it and will tell everyone why they love it so much — and will do this without you asking.
WHAT IS CUSTOMER-CENTRIC MARKETING?
Your product/service is impressive, but it’s your job to convince potential buyers. The bottom line of customer-centric marketing is to understand why a customer needs your product/service, how the product/service
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