Some-thing about company
Some-thing about company
Time spent with a cat is never wasted.”
― Colette
A voluntary association formed and organized to carry on a business.
Types of companies:
Following types are more famous:
sole proprietorship, partnership, limited liability, corporation, and public limited company.
Investment Company
Definition
Firm that invests the pooled funds of retail investors for a fee. By aggregating the funds of a large number of small investors into a specific investments (in line with the objectives of the investors), an investment company gives individual investors access to a wider range of securities than the investors themselves would have been able to access. Also, individual investors should be able to save on trading costs since the investment company is able to gain economies of scale in operations. There are two types of investment companies: open-end (mutual funds) and closed-end (investment trusts).
Private limited company
Definition
A type of company that offers limited liability or legal protection for its shareholders but that places certain restrictions on its ownership. These restrictions are defined in the company’s by laws or regulations and are meant to prevent any hostile takeover attempt.
Holding company
Type of business organization that allows a firm (called parent) and its directors to control or influence other firms (called subsidiaries). This arrangement makes venturing outside one’s core industry possible and, under certain conditions, to benefit from tax consolidation, sharing of operating losses, and ease of divestiture. The legal definition of a holding company varies with the legal system. Some require holding of a majority (80 percent) or the entire (100 percent) voting shares of the subsidiary whereas other require as little as five percent.
If you look at the top 20 companies of the world, 19 of them are still brick-and-mortar companies. I have nothing against tech companies. What I am saying is that if you have a car manufacturer or an oil and gas manufacturer, you won’t get the supply over the Net.
Anil Ambani
Limited Liability Company (LLC)
A Limited Liability Company, also known as an LLC, is a type of business structure that combines traits of both a sole-proprietorship and a corporation. An LLC is eligible for the pass-through taxation feature of a partnership or sole proprietorship, while at the same time limiting the liability of the owners, similar to a corporation.
As the LLC is not considered a separate entity, the company does not pay taxes or take on losses. Instead, this is done by the owners as they have to report the business profits, or losses, on their personal income tax returns. However, just like corporations, members of an LLC are protected from personal liabilities, thus the name Limited Liability.
Limited Liability Companies are recognized in all 50 states and the District of Columbia. In most states any type of business can form an LLC, though some state laws may require at least two members in order to form one.
Types of Small Business Loans
Business loans are used for specific reasons: buying equipment or renting space to operate, financing growth of an already proven business, or providing capital to expand.
Term Loans
If your business needs a sum of money to buy equipment or real estate up front, you need a term loan. This is a loan set to terms, meaning there is a set interest rate, down payment or collateral, monthly payments, and a term of months or years that consistent payments will be made through.
Businesses in the startup phase must provide a lot of documentation, business planning, and personal collateral for a bank to be willing to risk lending the funds to your new business. Operations in the growth and expansion stage typically see better results because they have consistent profits or rising sales to prove they have a good chance of repaying the loan.
Lines of Credit
A different type of lending is done through a line of credit. Just like you can tap the equity in your home to finance a purchase, a bank can lend against the value of something in your business as collateral to help finance your operations. Lines of credit are usually more fluid since you may not need to use the maximum of what you are allowed to borrow.
People are definitely a company’s greatest asset. It doesn’t make any difference whether the product is cars or cosmetics. A company is only as good as the people it keeps.
Mary Kay Ash
Factoring
Accounts receivable factoring is an interesting type of lending where the factoring company buys your accounts receivable amounts and proceeds to collect on them in the future under the normal terms. You could sell your accounts receivable for 97% of their value, and the factoring company earns the 3% as they are paid by the customers that owe you money.
Factoring is a different way of going about getting access to capital, but it can be quite costly with your AR being worth anywhere from 95% to 98% of its value in a month. When you add up the discount the factoring company gets over a year, the “interest” you are paying is quite high.
Small Business Administration Loans
The Small Business Administration was created to help foster the creation and growth of small businesses in the United States. If you are unable to qualify for loans through traditional banking means, the SBA may be able to help you through one of their three loan programs.
The three programs are the 7(a) loan program, the Microloan program, and the CDC/504 loan program. A 7(a) loan program has very specific requirements and is designed to help only in certain instances such as a business in a rural area or to streamline the loan process for active duty or veteran service members. The Microloan program provides very small loans to help buy equipment or inventory; funds cannot be used to purchase real estate. The 504 program is a much longer term loan designed to help businesses acquire significant assets for growth or expansion.
The SBA does not lend directly to small businesses. Instead, the government provides its bank lending partners a guarantee that the loan will be paid even if the business fails. This is to help foster some entrepreneurial risk to get businesses started up in communities across the country.
How to Buy a Company?
Finding a company to buy might not be as easy as it sounds, at least initially. The main consideration in buying a company consists in knowing what type of business you think will be profitable and then buying a company in that business.
A good place to start is by contacting a broker that specializes in buying companies for others. On a large scale, an investment banker would fill the needs of a large investor buying a company; but on a smaller scale, brokers exist that can put you in touch with the type of company you might want to buy.
Getting a Broker
Finding a broker familiar with the market requires that you demonstrate you are serious and that you have the means to make the purchase. Because of the overwhelming ratio of unqualified buyers, business brokers generally are hard to approach.
Nevertheless, if you show that you really want to buy a company, the broker will most likely show you a number of companies up for sale. The key is to know what kind of company you want, have a specified amount budgeted for the transaction and ultimately commit to making the purchase.
I have been quoted saying that, in the future, all companies will be Internet companies. I still believe that. More than ever, really
Andrew Grove –
Cash Flow and Valuation
The first thing you must determine before laying down your cash is what the company you are interested is actually worth. Once you have determined the value of the company’s assets, the company’s cash flow should be evaluated.
As a rule of thumb, small companies generally sell for 3 to 6 times their cash flow, so if a company has a cash flow of $150,000, the price for the company would be $450,000 to $900,000. Larger companies can pay up to 10 times cash flow in their acquisitions, while stocks on the stock market are usually trading at 15 to 20 times cash flow.
Once you have determined the company’s cash flow and the value of all their assets, you could write a letter of intent stating your offer. The offer can then be addressed by the company’s officers and your offer can be accepted or a counteroffer made.
Reference: Business Dictionary