Discovering Hidden Values in Business Acquisitions with Kevin Bieberhausen

In this episode we are exploring the success principals of growing wealth through acquisition of business with hidden potential, and you’ll hear interesting and unexpected stories of the vibrant world of home textiles and commercial styles. Our special guest is Kevin Bieberhausen, the principal at Fruition Capital, who transitioned from opera singing and a corporate career to become an influential entrepreneur in the textile industry. Kevin’s company, Heritage Fabrics, supplies upholstery and drapery to global giants like Disney and high-profile films, proving that essential businesses often drive monumental impact. Karen and Kevin discuss invaluable insights on buying and selling small businesses—covering everything from securing reliable brokers to the importance of consistent financials and recurring revenue. They delve into the crucial steps prospective business owners should take, the role of appraisals in SBA-backed deals, and the unique journey that led Kevin from the stage to the world of small business ownership. Whether you're an active buyer or a passive investor, you won’t want to miss his expert advice on making the leap from corporate life to entrepreneurship. Listen now for details on these episode highlights: Relevant subtopics: Common Issues in Business Sales Financial Records**: - Small business owners preparing books for tax purposes, not sale optimization. - Importance of preparing books three years in advance for a higher sale price. - Complex financial records complicate buying. - Unrealistically high price expectations; brokers’ role in setting expectations. - Ensuring a business can support debt. Valuation**: - Businesses in the $500k to $1.5 million earnings range typically sell for 3-4 times the bottom line. - Recurring revenue created business value and stability. - Initial listings often unreliable; due diligence is crucial. - Understanding industry norms and key characteristic assessments. Determining Acquisition Price - **Factors Influencing Price**: - Discretionary earnings, accounts receivable age, equipment, goodwill. - Consistent cash flow and recurring revenue importance. Lining up Financing - Business Appraisals**: - Crucial for bank (SBA lending) and investment soundness. - Aid in negotiation and reflect true market value of the business. - **Equity and Investor Negotiation**: - Offering higher equity and setting preferred interest rates. **Active vs Passive Investment**: - Active buyers: Operate and run the business. - Passive investors: Invest through vehicles like Fruition Capital. - Investment methods include self-directed IRAs. Kevin Bieberhausen’s Perspectives Deal Formation and Investment Paths - **Simplicity in Business Acquisition**: - Not as complicated as perceived. - Importance of personal connections with business owners. - **Acquiring a Business**: - Contact Fruition Capital. - Finding a business, contacting brokers, securing LOI. Kevin’s current role as Founder of Fruition Capital is to help the middle class elevate their share of the wealth and assist corporate employees transitioning to business ownership. To learn more, connect with Kevin to help you explore your options for business acquisition visit: bibelhausen.com or fruitioncap.com Karen is the President of Kugarand Capital Holdings where her extended team offers coaching and services to small business owners providing capital strategy and investor acquisition through the Launch Funding Network. As a thought leader in Angel and Crowdfund Investing, Karen offers investors decision tools, education, screening, due diligence, and syndication services through the National Network of Angel Investors. More information can be found at http://karenrands.co And if you register at the contact page you will receive her Compassionate Capitalist mini video tips, her ebook 12 Secrets of Innovation and Wealth and have an opportunity to schedule time to chat with Karen directly. Please help us build the Compassionate Capitalist community by subscribing, liking, and sharing this podcast. The Compassionate Capitalist Show is also on Youtube @angelinvesting with a library of over 280 episodes.