Case Study 9 Sea Breeze Property Services

b. What steps do you recommend the Higgins family take to conduct their due diligence on Seabreeze Property Services concerning their sellers motivation, asset valuation, legal issues, and the companys financial condition? Do you spot any red flags about this potential deal? (Please answer in two paragraphs of 3 to 5 sentences each.)

c. Explain the three main methods that the Higgins can use to determine a reasonable value for Seabreeze Property Services. Are there variations within these main methods of business valuation? (Please answer in 3 bullet points plus another 1 to 2 sentences to explain.)

Case 9 ugh concentric round Portland The price is purchase in Portland, Maine? J Seabreeze Property Services should these young family members a commercial landscaping The Kellys have no database of the case of the and snow removal company properties they see the job scheduling systems board in the office. The Hisense note that most of the pay's comployees have head for to as Higgins 31. his wife Trish 30, and his brother Palmer cactly what to do. lapa of the old the heads. If they bey Scabecze Prope, Scawice the boom have grown weary of their work in the imestment indus- In Greewich. Connecticut and are searching for the right that transforming all of the boa ledge and smoa besness to purchase. Like many other young people, they are computer database will be es catal looking to capitalize on a significant trend purchasing a busi- The younger rechts abans peas from an entrepreneur of the Baby Boom Generation who which involves leg the created to has built a successful company and is ready to retire but hes its day-to-day operations is bet the Kellys no one to whom to hand the reins Trishays she has spent her bothered by it. In fact the Kellys have talked to y poca sed analyzing companies and crunching numbers but now buyas ac the last scaly s babae na focada good es to become a business owner so that she can contribute with anyone who could Stecz Praca Scaristote to and become a business leader in a community. cilavel. The bese becamposed the Ho The trio started their search in the typical way. They agence and financial backgroads and the visionado typed how to buy a business into Google and discovered they have described for increasing the company's sales stounding array of options. Initially, their earch param- The Higginses are moving forward with resices for Ses were very broad, and their price range was between 53 purchasing Seabreeze Property Services, but they have $10 million, which would enable them to use their own two other businesses in mind, a specialty ad saab pasey and imestments from family members and friends. Tishing company in Atlanta aada food meas Bash They were willing to move almost anywhere in the United Columbia just in case they cannot strike a stable deal States and they preferred a service business rather than a Questions manufacturing or retail operation. They also wanted to pur- sea company in which the current owner would be will- 1. What advantages do business becach as the Hig- ing to stay on to help the new owners manage it ginses gain over starting a business free strad? As they researched potential candidates, they realized What disadvantages do the typically encount? that their best option would be a business that has performed 2. What steps do you recommend the Higanso take to well financially over time, provides a service in a niche conduct their due diligace Seabrocz Property Se market and faces little competition. They spent a year re- vices concerning the seller's motivation asset valtion zrching more than 1,000 potential companies, which they legal issues, and the company's financial condition? Towed down to 75 prospects. After holding conference Do you spor any red flags about this potential cal? calls with the owners of those 75 companies, they filtered 3. Explain the various methods that the Higginses cause their list to 10 businesses that were spread across the country, to determine a reasonable value for Seabreeze Property from Naada to Cape Cod and were in industries as varied as Services cent planning and conveyor belt maintenance. Most of the 4. In addition to investing their own money and tapping ellers fell into one of two groups: owners who were about to the capital of family members and fricas. what other reture but had neglected to put into place a succession plan. sources of capital should the Higginses explore if they and owners in their 40s or early 50s who had experience in decide to purchase Seabreeze Property Services? their particular fields but lacked the management and finan- 5. What advice can you offer the Higginses about nego- cal acumen to grow their businesses in a significant way. tiating a deal with the Kellys to purchase Seabreeze One of the most promising companies the three young en- Property Services? precars are considering buying is Seabreeze Property Ser- nices a commercial landscaping and snow removal company Sourtes Based on Alina Tugend Buying a Shall Business. The n Portland. Maine. John and Pete Kelly, who have owned the Hard Work Is Only Just Beging. Na York Times. Mach 17, 2016 company for 20 years, are not ready to retire (John is 51, and p. B : Alina Tugad "A Path for Espen When a SINE Pete is 46), but they want to see their company expand beyond the Goal-Nor York Times, Sumber 9. 2015.com .com/2015/09/10/business the base of commercial customers that Scabreeze serves in a companies html?_r=0. 809