Mergers & Acquisitions Advisory

A Neumann & Associates, LLC

December 8, 2010

Entrepreneurs find ‘friendly money’ less accessible in 2010

By Joseph Eneldas

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Press Release

Atlantic Highlands, NJ, December 9, 2010 – A Neumann & Associates, a well-known New Jersey business brokerage company, has announced a slight uptick in the number of existing business transfer deals this year, and a dramatic shift in the type of funding used to finance these deals.

The number of businesses bought and sold has remained mostly stable during 2010.  Approximately 1,117 U.S. small businesses were sold during the third quarter according to BizBuySell.com. The difference is that the seemingly easy access to funding from friends and family has slowed.

“The majority of entrepreneurs, particularly first timers, tend to reach out to ‘friendly money’ after realizing they don’t have enough equity to purchase a business or after tapping out their savings and credit cards,” according to Achim Neumann, President of A Neumann & Associates, New Jersey. “In the past we’ve seen the lion’s share of funding come from friends and family; this is no longer the case.”

Many small business transactions are funded through conventional small business loans or angel investors. However, it seems that as banks have tightened up loan requirements in lock step with the grey economy, so relatives are following suit. This traditionally ready-made source of interest-free loans is getting harder and harder to come by, while simultaneously demanding more accountability.

As part of a survey conducted at Pepperdine University this fall, 35% of 388 U.S. entrepreneurs polled said they have funding from informal investors – down from 56% of entrepreneurs polled in the spring.

With the economy in the news daily, and business closures part of day-to-day conversation, the higher risks of starting a business are now glaringly obvious as compared to buying an ongoing business. As ‘friendly money’ becomes less accessible, entrepreneurs are seeking creative financing options. And relatives are viewing these loans as they would any other investment, looking for real return on their money.

This conservative trend seems to have hit every sector, particularly entrepreneurs starting businesses from scratch. According to Neumann, “With an existing ongoing business, entrepreneurs take on less risk with a proven model, and they get better financing, an established cash flow and a higher probability to succeed.”

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About A Neumann & Associates, LLC

A Neumann & Associates, LLC is a professional mergers & acquisitions and business brokerage firm having assisted business owners and buyers in the business valuation and business transfer process through its affiliations for the past 30 years. With an A+ Better Business Bureau rating, the company has senior trusted professionals with a deep knowledge based in multiple field offices along the East Coast and has performed hundreds of business valuations in its history. The firm’s competitive transaction fees are based on successfully completing transactions. For more information, please contact A Neumann & Associates at 732-872-6777 or info@neumannassociates.com

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Client Testimonials

“Working with Marc and his company was a pleasure. What I thought was going to be a just another one of those pushy sales companies was just the opposite. Polite, knowledgeable, and a pleasure to talk to and deal with. Marc handled most of the interaction and he has one of the greatest demeanors. Again, it was a pleasure working with him and his firm.”

Douglas DiCeglio

“I recently completed an acquisition using A Neumann & Associates. Tony Valentino was very helpful and accessible during the entire process. They do a thorough job vetting both parties and got us to the finish line.”

Srini Mudambi

“Claus out of Florida helped us with the sale of our business. We had never done anything like this and him and his team walked us through the process from start to finish. We had some challenges through the process and Claus continued to show up even in the difficult conversations.”

Colby Harris, Co-Owner, Del Mar Designs

“Claus Madsen thoroughly helped us with selling our company. From the 1st introductory meeting explaining to us what was possible, to providing us with resources to assist with the sale. Claus was invaluable throughout the whole sales process. Claus was with us every step of the journey and always made himself available for any questions or issues that came up along the way. If you are interested in selling your business, I encourage you to reach out to Claus and the ANA team so that they can let you know what’s achievable. These guys will make it happen!”

Ron Harris, Co-Owner and Vice President, Del Mar Designs

“A Neumann & Associates is the only business broker I would use or consult with. They have assisted with 3 business sales over the past 15 years with me. They are honest and sincere and have always performed better than my expectations. They are the only one i would use for the sales of my businesses.”

James Belanger, Business Owner

“I wanted to take a second to commend the exemplary customer service from both you [Karin Neumann] and Mr. Valentino. It’s both a rarity in the industry, and very much appreciated.”

Andrew G., Investor

“We worked with Neumann & Associates to investigate the purchase of a research company in 2010 and found Achim to be capable, forthright and realistic. His depth of experience enabled us to fully understand our options, offering creative options that might enable the acquisition. While we didn’t acquire that particular company at that time, we know exactly who to call whenever we’re looking to buy or sell a business.”

Daniel Coates, Buyer

“Purchasing a business through this firm was a pleasure. Gary was very professional and transparent throughout the entire process. I look forward to working with A Neumann & Associates in the future.”

William Klemens, Buyer

“I utilized A. Neumann & Associates to assist in an M&A process. They are VERY thorough in using their time-tested process to calculate the value of investment opportunities, a process which provided a very detailed explanation for the value of the potential opportunity. Additionally, they also went above and beyond to extend other services including connecting with others who specialize in your industry and can assist with necessary steps including legal and accounting. Highly recommended!”

Edward Lane , Business Owner

“I recently contacted A. Neumann and Associates about getting a valuation of my business done. I spoke with Achim, who explained the process in detail. He had his colleague Gary come to my office in order to get a clear understanding of my business, and what I was hoping to accomplish. His patience in answering all my questions and his knowledge of the proper way to market my business gave me great confidence that this is the firm I will be using when the time comes for me to sell my business for max value. They gave me great insight into the steps I need to take now to get the best deal in the future. I highly recommend this firm to anybody who wants to sell now or down the road. They not only know their stuff, their actually just real nice guys.”

Robert Kardane, Business Owner
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If you are considering selling your business, please contact us to learn more about our comprehensive service spectrum. Our experienced professionals will answer all your questions about selling a privately held business in complete confidentiality. Please fill out our contact form, or call us at 732-872-6777. We will contact you directly and will never identify ourselves to your employees.

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