After years of unprecedented market gains the recent financial meltdown has caused investors nationwide to wake up with a head-splitting financial hangover. Believe me, I know your pain.
The worst was taking a 90 percent loss while vested in a technology mutual fund. Who could have predicted that a well-run fund could lose? It was managed by top notch, Harvard educated managers. That one hurt a lot. Real money saved over years and lost in mere months.
The security of your investments is becoming more and more important these days. Investors want to be able to anticipate decent returns in the stock market, but the market takes them on a roller coaster ride that would be the envy of any amusement park. One day it's a 200 point rise and setting a new record high on the Dow, then the next a 300 point tumble that takes six weeks to shake off.
If you're like me, you have taken that ride more than once over the years. It's happened in a big way twice in the past decade alone!
The series of highs and lows can leave you with a feeling of hopelessness. How can you know if a company is cooking the books? How can you predict if there will be another terrorist attack that will cripple our Country for months? Who has a crystal ball that can reveal when the next financial market meltdown will wash over us? Whenever these cycles hit personal fortunes are wiped out in a blink of an eye.
You may be thinking, "So what else can I invest in?"
The answer is to invest in real estate...but maybe not in the way the first comes to mind.
Real estate is an asset that you see and touch, is insured, and produces monthly income. Historically it is one of the safest investments available and there are several ways to get started. Here's a few:
1) The "Speculator" Approach - you could become a real estate "speculator" and buy properties with the hope that they will go up in value and allow you to reap windfall profits when you sell. Of course, this type of approach has a large amount of risk which has left large numbers of speculators who were consumed with "Flipping Frenzy" over the last few years in a very tough place when the market turned and did not favor their investment approach.
2) The Landlord Approach - on a more traditional level, you could buy a home, duplex, or small apartment building and rent the property out. Over time as you collect rent your tenants will pay off your mortgage. This does take some time, work, and experience. This approach is rather safe and can result in a good return in both the short and long term. The downside is that there can be a large amount of time required to make this work.
Now what if you find yourself in large group of over 200 Million Americans who want the benefits of real estate investing but don't have the spare time or hard-nosed demeanor needed to be a successful landlord? While not as well known as the first two methods, there is a third approach.
3) The Passive Method - this style of investing is known as making "Private Mortgage Loans". Private Mortgage Loans, when set up properly, can provide your portfolio with a great return in any real estate market. Up, down, flat...it doesn't really matter.
The investment model is simple. You directly loan money, at a very low loan-to-value, against a piece of real estate. The borrower is typically a tried-and-true veteran landlord that has a portfolio of equity-rich properties and also is familiar with the ins-and-outs of finding tenants and managing rental property.
Your return comes in the form of interest payments from your borrower and because you establish the loan terms together you can have the payments come regularly or have them rolled into the loan and paid out in one lump sum when the loan term is over.
To provide you with the safety you want, your investment is secured by a first mortgage. As long as you follow common-sense lending practices then you can enjoy a level of confidence in your investments that the stock market cannot provide.
Private Mortgage Lending is a vehicle that can help you quickly recover from harsh stock market losses. Using this approach you can realize returns greater than 10% and never get called to fix a leaky pipe. Unfortunately, most investors aren't even aware this opportunity exists.
Now that you've read this article, you can't claim ignorance as an excuse. Stop what you are doing and start looking for someone who needs a private mortgage with whom you can do business with. Find a landlord at your local real estate investor association, hit a round of golf together, and see if it makes sense to do business together. Then take action and make your first investment. Start small if it makes you feel better, but get started.
Failure to take action puts you in jeopardy of letting it slide to the bottom of your to-do list. If that happens, in a year you'll wonder why things have not changed for you financially.
Brian Teets is a lifetime resident of Michigan who has endured the ups and downs of the stock market. To request a FREE CD that reveals how you can get started with the safe investment of private mortgage loans, call his office at 734-328-6020 or by visiting his website at http://www.InvestInMichigan.org
Article Source: http://EzineArticles.com/?expert=Brian_Teets
วันเสาร์ที่ 27 ธันวาคม พ.ศ. 2551
Clean Up Your Financials Well in Advance of Your Business Sale
Buying a business is a risky proposition. The buyer is attempting to examine and access all of the risk factors to determine how much to pay, what deal structure to propose, and even whether or not to even make an offer. What if I lose a key customer, employee, or supplier? What if our technology is surpassed by a new, lower-cost solution? What happens if a big company decides to enter our niche? These are just a few of the concerns that make buyers less generous in their offer price and terms.
If your financials are questionable, that may be the deciding factor that diminishes your selling price or even blows up the deal.
Audited financials are the best to put a buyer's mind at ease. For smaller companies, the cost of this is not warranted. The next best are reviewed financials. They show that a CPA has put your accounting process through some review and scrutiny. Compiled statements are OK, but are closer to a book keeper's role than a CPA's approach. Just remember, the buyer's accountant is going to perform due diligence on your financials at a level closer to an audited statements process. If he finds mistakes and inconsistencies, a lack of trust on all other data can develop.
Your business tax returns will be gospel to the buyer because the IRS frowns on companies not reporting a portion of their income and that is what the buyer's bank reviews to determine the financing available for the acquisition.
In the Mergers and Acquisitions business we all rely on "recast" financials to basically remove all of the expenses the owner runs through his business and make the company look more profitable to drive up the selling price. Sophisticated buyers (i.e. acquisition oriented corporations) may not directly confront you on the recasting, but they are not likely to give you full credit in their analysis.
They may even develop some reservations about your character and ethics if the amounts are excessive. They may question your ability to fit in as a good corporate citizen as you transition your business to their institutional corporate structure.
If you are planning on selling your company in three years, why not start eliminating the expenses you run through the business that push the boundaries of business versus personal expenses? In the first year eliminate 33% of the country club, entertainment, business trips, conferences and non-contributing relatives on the payroll. The second year, eliminate another 33% of those and in the year preceding the sale, eliminate them completely.
Imagine the style points you would get from a sophisticated buyer when they discovered that your financials are really your financials with no recasting. Not only that, but you will likely receive a high end purchase price multiple and a greater percentage of cash at close. So, for example, if companies in your industry sell for a range of between 5 and 6.25 X EBITDA, then your company would likely sell at a multiple closer to the 6.25 high end than the 5 low end multiple.
If you had run $200,000 of owner expenses through the business and eliminated that practice you would pay approximately $80,000 in additional taxes. Your recast EBITDA would be higher than your reported EBITDA, but the sophisticated investor might only give you $100,000 credit and would adjust your multiple to the low end. Your recast EBITDA, for example, of $3.2 million would be credited by the buyer at $3.1 million with a valuation multiple of 5 X, resulting in a proposed purchase value of $15.5 million.
Compare this to using your real EBITDA of $3 million, but because it is not recast, your buyer pays a risk reduction premium in valuation multiple and moves you up to 6 X, resulting in a proposed purchase value of $18 million. This is a pretty impressive improvement in selling price for increasing your company's taxable income phased in over the three years prior to your business sale.
You may be asking yourself skeptically, how can this be? Remember, buying a business is all about minimizing the buyer's perception of risk. Now your financials are rock solid and do not require a long explanation on why they are really better than reported to the IRS.
This is the most powerful risk reduction strategy available to business sellers. You will differentiate your company from every other acquisition target the buyer has reviewed. You increase your credibility on every other piece of information that you have provided during the courting and due diligence process. Their opinion on your business acumen, management ability, judgment, and ethics has been elevated. The buyer feels more confident that this will be a successful acquisition. For that they will pay a premium.
Dave Kauppi is the editor of The Exit Strategist Newsletter, a Merger and Acquisition Advisor and President of MidMarket Capital, representing owners in the sale of privately held businesses. We provide Wall Street style investment banking services to lower mid market companies at a size appropriate fee structure.
Article Source: http://EzineArticles.com/?expert=Dave_Kauppi
If your financials are questionable, that may be the deciding factor that diminishes your selling price or even blows up the deal.
Audited financials are the best to put a buyer's mind at ease. For smaller companies, the cost of this is not warranted. The next best are reviewed financials. They show that a CPA has put your accounting process through some review and scrutiny. Compiled statements are OK, but are closer to a book keeper's role than a CPA's approach. Just remember, the buyer's accountant is going to perform due diligence on your financials at a level closer to an audited statements process. If he finds mistakes and inconsistencies, a lack of trust on all other data can develop.
Your business tax returns will be gospel to the buyer because the IRS frowns on companies not reporting a portion of their income and that is what the buyer's bank reviews to determine the financing available for the acquisition.
In the Mergers and Acquisitions business we all rely on "recast" financials to basically remove all of the expenses the owner runs through his business and make the company look more profitable to drive up the selling price. Sophisticated buyers (i.e. acquisition oriented corporations) may not directly confront you on the recasting, but they are not likely to give you full credit in their analysis.
They may even develop some reservations about your character and ethics if the amounts are excessive. They may question your ability to fit in as a good corporate citizen as you transition your business to their institutional corporate structure.
If you are planning on selling your company in three years, why not start eliminating the expenses you run through the business that push the boundaries of business versus personal expenses? In the first year eliminate 33% of the country club, entertainment, business trips, conferences and non-contributing relatives on the payroll. The second year, eliminate another 33% of those and in the year preceding the sale, eliminate them completely.
Imagine the style points you would get from a sophisticated buyer when they discovered that your financials are really your financials with no recasting. Not only that, but you will likely receive a high end purchase price multiple and a greater percentage of cash at close. So, for example, if companies in your industry sell for a range of between 5 and 6.25 X EBITDA, then your company would likely sell at a multiple closer to the 6.25 high end than the 5 low end multiple.
If you had run $200,000 of owner expenses through the business and eliminated that practice you would pay approximately $80,000 in additional taxes. Your recast EBITDA would be higher than your reported EBITDA, but the sophisticated investor might only give you $100,000 credit and would adjust your multiple to the low end. Your recast EBITDA, for example, of $3.2 million would be credited by the buyer at $3.1 million with a valuation multiple of 5 X, resulting in a proposed purchase value of $15.5 million.
Compare this to using your real EBITDA of $3 million, but because it is not recast, your buyer pays a risk reduction premium in valuation multiple and moves you up to 6 X, resulting in a proposed purchase value of $18 million. This is a pretty impressive improvement in selling price for increasing your company's taxable income phased in over the three years prior to your business sale.
You may be asking yourself skeptically, how can this be? Remember, buying a business is all about minimizing the buyer's perception of risk. Now your financials are rock solid and do not require a long explanation on why they are really better than reported to the IRS.
This is the most powerful risk reduction strategy available to business sellers. You will differentiate your company from every other acquisition target the buyer has reviewed. You increase your credibility on every other piece of information that you have provided during the courting and due diligence process. Their opinion on your business acumen, management ability, judgment, and ethics has been elevated. The buyer feels more confident that this will be a successful acquisition. For that they will pay a premium.
Dave Kauppi is the editor of The Exit Strategist Newsletter, a Merger and Acquisition Advisor and President of MidMarket Capital, representing owners in the sale of privately held businesses. We provide Wall Street style investment banking services to lower mid market companies at a size appropriate fee structure.
Article Source: http://EzineArticles.com/?expert=Dave_Kauppi
Forex - The Beginner's Guide
If you are a beginner and you are want to gain knowledge about the Forex market then you need to know about the Forex beginner's guide.
If you want to become the full time trader then you need to practice for two years an learn about the Forex market. You should learn about the different techniques that are used for trading in Forex. You should know the different ways of earning huge profit in this huge market of profit and loss. If you are a beginner and you are searching for the guide that can help you to get the knowledge about the market then The Beginners Guide is the best option for you:
1.) Search For The Forex Education Provider:-
There is wide difference between the gambling and investing in Forex. You should try to learn each and every thing about the Forex. You should learn about the different ways that you can use for investing in market. if you want to gain the perfect knowledge about the Forex then you need to search for the trustworthy source that can fulfill your knowledge of getting the perfect information about the Forex market. There is no limit for learning. Learning can take place at any age. There is no age limit for learning.
2.) Find A Forex Broker:
There are many Forex brokers that don't know the importance of time. You would find that the Forex brokers are of different shapes and size. You can choose the broker as per your requirements. You broker would help you to know the different trading strategies that would aid you to earn huge profit as soon as possible. You would also come to know the legal strategies of trading in Forex. You would also come to know about the appetite of risk. Before selecting the broker you should do little bit of research work that would help you to know about the basic concepts of trading. You should try to find a source that would show you difference between the brokers and you can choose the perfect broker for yourself.
3.) Search for Trading System:
You would not have any difficulty in searching the trading system. There are many systems that can help you to earn profits and fulfill you dreams. If you do research work then you would not have problem in selecting the trading system that would fit into your personality.
4.) Practice:
Practice makes the man perfect. If you do the practice of trading then you would get the desired fruits. If you want to improve your system then you need to recollect the teaching of your Forex class. If you want to become a successful trader then you need to open a demo account.
5.) Learning:
Learning is a continuous process. Learning does not have any end. Learning would improve your trade. If you stop learning then you would not be able to earn the desired results. Learning can take place at any age. There is no age limit for learning.
John Horsch writes premium high quality articles ranging from Internet Marketing to Gardening. Each is researched and edited with the greatest degree of professionalism. John has been writing articles for Internet consumption since 2001. Great Forex Tips and Reviews: http://eliteprofitproducts.com/forexreview/
Article Source: http://EzineArticles.com/?expert=John_Horsch
If you want to become the full time trader then you need to practice for two years an learn about the Forex market. You should learn about the different techniques that are used for trading in Forex. You should know the different ways of earning huge profit in this huge market of profit and loss. If you are a beginner and you are searching for the guide that can help you to get the knowledge about the market then The Beginners Guide is the best option for you:
1.) Search For The Forex Education Provider:-
There is wide difference between the gambling and investing in Forex. You should try to learn each and every thing about the Forex. You should learn about the different ways that you can use for investing in market. if you want to gain the perfect knowledge about the Forex then you need to search for the trustworthy source that can fulfill your knowledge of getting the perfect information about the Forex market. There is no limit for learning. Learning can take place at any age. There is no age limit for learning.
2.) Find A Forex Broker:
There are many Forex brokers that don't know the importance of time. You would find that the Forex brokers are of different shapes and size. You can choose the broker as per your requirements. You broker would help you to know the different trading strategies that would aid you to earn huge profit as soon as possible. You would also come to know the legal strategies of trading in Forex. You would also come to know about the appetite of risk. Before selecting the broker you should do little bit of research work that would help you to know about the basic concepts of trading. You should try to find a source that would show you difference between the brokers and you can choose the perfect broker for yourself.
3.) Search for Trading System:
You would not have any difficulty in searching the trading system. There are many systems that can help you to earn profits and fulfill you dreams. If you do research work then you would not have problem in selecting the trading system that would fit into your personality.
4.) Practice:
Practice makes the man perfect. If you do the practice of trading then you would get the desired fruits. If you want to improve your system then you need to recollect the teaching of your Forex class. If you want to become a successful trader then you need to open a demo account.
5.) Learning:
Learning is a continuous process. Learning does not have any end. Learning would improve your trade. If you stop learning then you would not be able to earn the desired results. Learning can take place at any age. There is no age limit for learning.
John Horsch writes premium high quality articles ranging from Internet Marketing to Gardening. Each is researched and edited with the greatest degree of professionalism. John has been writing articles for Internet consumption since 2001. Great Forex Tips and Reviews: http://eliteprofitproducts.com/forexreview/
Article Source: http://EzineArticles.com/?expert=John_Horsch
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