Mainshares Resource Center

Mainshares has an ever-growing pool of resources to help entrepreneurs and investors navigate the nuances of small business transactions.

Creating Exit Options: Structuring Calls and Puts in SMB Investments

Dec 4, 2024

Call and put options in transaction documents are gaining in popularity as a way to provide liquidity for investors or control over the cap table for operators. Learn how these options work and top considerations for investors before entering into a deal.

Common red flags in SMB financials: what to watch out for and how to address them

Nov 25, 2024

Buying an SMB comes with inherent risks. However, some risks can be mitigated with proper due diligence, clear communication, and the right deal structure.

Announcing: Investment Management Tools

Nov 14, 2024

Mainshares' Investment Management tools gets an upgrade. Check out how issuers and investors can use the new features for a better experience.

Why buying a business can result in three separate transactions

Nov 14, 2024

Buying a business can involved separate complex and lengthy transactions. In this article, we explain what business buyers should prepare for before beginning their search journey and how Mainshares can help navigate the buying process.

The Myth of Absentee Business Ownership: Why 'Hands-Off' Usually Means 'Hands Full'

Nov 12, 2024

Passive business ownership sounds like a dream. For most—that's exactly what it is. Learn why running an absentee business is unlikely in practice, and why being a passive investor in small businesses may be a better option.

Mainshares partners with Alto IRA to enable retirement account investing in SMB opportunities

Nov 12, 2024

Investors now have access to SMB investment opportunities through their tax-advantaged individual retirement account (IRA).

How to stand out to sell-side brokers

Nov 10, 2024

If you're interested in a listing, chances are, so are other qualified buyers. What can you do to cut through the noise? Here are a couple suggestions.

Understanding SMB valuation multiples

Nov 8, 2024

Understanding valuation multiples is a key aspect to buying or investing in a business with confidence. In this article, we'll explain what valuation multiples are, types of valuation multiples, and factors that may impact how a company is valued.

Why invest in small business acquisitions

Oct 15, 2024

Explore the benefits of investing in small business acquisitions. Learn how small businesses drive local economies, create jobs, and offer attractive returns.

Investing in SMB acquisitions over the years: How a once-fragmented market is more accessible than ever

Oct 15, 2024

Investment opportunities in SMB acquisitions have come a long way in the past few years. In this article, we explain the factors that have led to its surging popularity, as well as the hurdles and considerations investors face today.

Why self-funded search entrepreneurs raise capital

Oct 14, 2024

The best operators suited to acquire a small business may not have the funds necessary to close the deal. Instead, self-funded search entrepreneurs commonly use a mix of SBA debt and investor equity to reach their capital needs.

What you can expect from offerings on Mainshares

Oct 2, 2024

Issuers on Mainshares go through rigorous due diligence before raising capital from investors. Find out how Mainshares vets issuers, and what investors can expect when reviewing deals on the platform.

Introducing: Fund investing on Mainshares

Sep 9, 2024

Invest in diversified funds with experienced managers directly from your Mainshares account

Using a 401(k) to Buy a Business

Jul 26, 2024

Leveraging a tax-advantaged account to buy a small business is a little trick that most people don't know. The outcome can be very positive for a business buyer. In this article, we explain how.

Buying a Franchise vs. an Independent Business

Jul 18, 2024

Both options have their pros and cons. In this article, we break down their key differences.

Preferred returns' cost of capital and its impact on management decision making

Jul 4, 2024

How do operators determine the best use of excess cash when they have a preferred return owed to investors? In this article, we discuss the choices that many operators face in this situation.

Why having a support network is so critical when looking to buy a business

Jun 27, 2024

Mainshares' Operator Network is the best community for the hands-on support and guidance from folks who have been there.

6 tips to prepare for your first SMB acquisition

Jun 25, 2024

A common question we get from Operators and Search Entrepreneurs is “how do I prepare to buy a business?” From the financial to the practical, there are some important steps you can take to prepare yourself for when the opportunity arises. 

Lessons from growing too fast without enough working capital

Mar 21, 2024

Healthy, sustainable growth enables business owners to balance their target growth assumptions with the necessary working capital to fuel their ambitions.

Creating financial forecasts can be as valuable as an exercise for you as it is for your investors and lenders

Mar 1, 2024

A financial forecast is critical underwriting component to fully understand the risks and opportunities of a business acquisition. Buyers should take this task seriously, as it's meant to benefit themselves in the end.

How to mitigate the risk of high customer concentration before buying a business

Feb 23, 2024

If you're planning on financing your acquisition with SBA debt, your underwriting bank may only be willing to provide a portion of what they would normally be comfortable with. Here's what you can do bridge the rest of your capital stack.

Who's entitled to outstanding accounts receivables when a business is sold?

Feb 20, 2024

Delivering services to customers and waiting on their payment to come in is typical in day-to-day business operations. But what happens when the business is sold after you've provided services and before the funds have been collected?

How to earn passive income from SMB ownership

Feb 10, 2024

With increased interest in SMB M&A, many investors are looking for ways to earn passive income from buying a business. This article outlines five approaches to passively owning an SMB as well as their pros and cons.

Acquiring your first business and thinking about doing a roll-up/hold-co?

Feb 7, 2024

Raising capital is hard, especially if it's your first time. The most simple option to successfully close your first deal is usually the best.

Should you buy a business or start from scratch?

Jan 30, 2024

Buying vs building? Explore the rewards and tradeoffs of entrepreneurship through acquisition.

Comparing cash vs. PIK interest when financing a business acquisition

Jan 25, 2024

PIK interest refers to interest that is paid-in-kind vs in cash. It is relatively common in debt investments from private lenders and SBIC funds. This article outlines how PIK interest works and how it compares to cash interest.

Assumed & Excluded Liabilities in an Asset Purchase

Jan 20, 2024

An asset purchase is attractive to buyers given that they generally don't inherit the sellers's liabilities, as would be the case in a stock sale. But, it's not all a free pass to side-step responsibilities. We break down some exceptions to the rule.

Key Legal Documents in a Business Sale

Jan 17, 2024

A number of legal documents are required when conducting a business transaction. For most people, this is the first time they have encountered these documents. This post outlines some of the standard documents in a business transaction.

How to Handle Customer Deposits in a Business Sale

Jan 15, 2024

Customer deposits may be claimed by the seller and the buy in a business transaction, but who has the right to those funds? Our experience shows one party is typically entitled to claim customer deposits.

Funding a business acquisition with equipment financing

Jan 13, 2024

For businesses with large amounts of equipment, buyers may turn to various forms of equipment financing to fund the deal. Equipment financing is backed by the equipment of the business and is a useful form of debt, if the deal is otherwise unbankable.

Depreciation recapture in a small business acquisition

Jan 11, 2024

When buying a business as an asset sale, there is often depreciation recapture due to the IRS. This post explains how depreciation recapture occurs, how to calculate it, and how it is typically handled when buying an SMB.

Business Broker Fees: How Much Are They, And Who Pays?

Jan 10, 2024

When you want to sell or buy your business, you want the best value possible. As a seller, you want the highest selling price, and as a buyer, you look for the lowest price. Business brokers help you achieve the best value possible.

Why white-collar individual business buyers sometimes present additional risk compared to operators and larger firms

Jan 9, 2024

Just how business buyers diligence sellers in a transaction, sellers diligence buyers. Sometimes, white-collar individuals can present execution risk compared to other buyers.

How business buyers can build trust with a prospective seller

Jan 2, 2024

Business buyers may face competitive pressures from other prospective buyers in a given deal. Here's how to gain the seller's trust and stand out as the best option.

How to Value a Restaurant

Jan 1, 2024

Understand how to value a restaurant, the factors that can increase how much a restaurant is worth, and how to analyze a restaurant for sale as a buyer.

The benefits of selling to an employee

Dec 30, 2023

Among the exit options a small business owner has, selling to an employee stands out in terms of its advantages. This article dives into three key ones: price transparency, ensuring stability, and experience.

Using an F-reorg to purchase an S-corp

Dec 30, 2023

This post covers F-reorganizations, a common approach to selling an S-corp. It allows the seller to roll equity without being taxed on the roll, while allowing the buyer to received a stepped up basis on the assets.

Special purpose vehicles for SMB acquisitions

Dec 29, 2023

Many small business entrepreneurs form SPVs to acquire operating companies. SPVs allow entrepreneurs to shield their future investments and their own investors from the specific operating company.

Transferring business licenses: hurdles and hiccups we're seeing in SMB transactions

Dec 17, 2023

Don't wait until your closes to ensure you have the required licenses to operate. Depending on your local regulations, this process can take much longer than expected.

Cash vs. accrual accounting in a small business

Dec 16, 2023

While cash accounting simplifies tracking cash movements, accrual accounting offers a more comprehensive view of financial health, making it the preferred choice for investors and lenders.

How to use an SBA loan to buy a business

Dec 15, 2023

SBA loans can help you finance acquiring an existing business or franchise if you meet the SBA requirements.

The 10 steps to buying a business

Dec 15, 2023

From identifying what you want in a business to maintaining your new business, there are many steps to take in the process of buying a business. Make sure you don’t miss any important ones along the way.

Calling capital for an SMB acquisition

Dec 15, 2023

For SMB acquisitions funded by investors, the entrepreneur will need to call the capital prior to the deal closing. This article explains the order of operations for funding an SMB acquisition and how to call capital.

Insurance requirements when buying a business with an SBA 7(a) Loan

Dec 14, 2023

Navigating the intricacies of an SBA 7(a) loan can feel overwhelming, especially when it comes to meeting insurance requirements. In this article, we discuss the essential insurances, from hazard and liability to worker's compensation and life insurance.

Equity call options: the right to buy out investors

Dec 2, 2023

Structuring an equity raise can be complex, particularly when it comes to setting the ability to buy out the investors at a future date. This article aims to explain the equity call option, a way for small business entrepreneurs to buy out their investors.

Off-balance sheet liabilities in a small business

Dec 1, 2023

Off-balance sheet liabilities refer to financial obligations and commitments that a company has but are not reported on its balance sheet. This post covers why these liabilities are important and how to diligence them.

A guide to selling a business to your key employees

Dec 1, 2023

Learn about the different deal structures that exist before deciding on what exit strategy you'll use to sell your business to key employees.

The tax consequences of buying a business to consider

Dec 1, 2023

When buying a business, many factors may influence your deductions and taxes owed: asset sales vs. stock sales, S Corps vs. LLCs, and more.

Variable rate SBA debt: a tale of caution from deals we've seen

Nov 19, 2023

Variable rate SBA debt can lead to higher or lower debt service in the future. As a rule of thumb, it never hurts to plan for higher rates, but we caution against planning for lower rates.

Handling UCC liens in an asset purchase

Nov 18, 2023

One common worry is the status of the seller's assets, especially when it comes to potential legal entanglements like UCC liens. This post covers how to handle UCC liens in an asset purchase.

What goes into getting an SBA term sheet for an acquisition?

Nov 15, 2023

Getting an SBA term sheet is one of the most important steps after getting an offer accepted by the seller of a business. This post breaks down what goes into getting a term sheet for an SBA 7(a) loan.

A brief guide to private placement memorandums

Nov 7, 2023

Private Placement Memorandums (PPMs) are key disclosure docs used when raising capital for a small business. This post covers the typical outline, how a PPM is used, when it is presented and more.

Member-managed vs. manager-managed LLCs

Nov 3, 2023

The decision-making process and autonomy of the CEO depends a lot on how an LLC is structured. In this post, we break down the differences between member-managed and manager-managed LLCs.

Common structures for seller notes

Nov 1, 2023

Unlike SBA loans, seller notes can be structured in many different ways. This post breaks down common ways to negotiate a seller note to buy a business, including interest-only, balloon payments and stand-by clauses.

What is a Certificate of Good Standing?

Oct 26, 2023

A Certificate of Good Standing is often required by lenders, attorneys and investors during a business transaction. This post outlines what the certificate means and why it's required.

An introduction to Blue Sky filings

Oct 20, 2023

This post explains blue sky laws' importance, differences between states, when to file and how to maintain compliance when raising money for a business.

What are tax distributions?

Oct 13, 2023

Many small businesses with investors have provisions for tax distributions in their operating agreements. This post explains how phantom income is created and how tax distributions work.

Introducing Acquisition Targets by Mainshares

Oct 6, 2023

Find pre-qualified acquisition targets on the Mainshares platform. The full set of targets are updated weekly.

Bad actor checks under Regulation D

Oct 4, 2023

The SEC disqualifies bad actors from taking advantage of Regulation D to raise capital for small businesses. This article covers the key parts of the regulation, outlines the disqualifying events, and explains how to check bad actor status.

Comparing enterprise value and equity value in an SMB

Sep 30, 2023

Enterprise value and equity value are two important metrics for valuing and negotiating a small business acquisition. This post explores the differences, how to calculate them, and when to use which metric.

Understanding waterfall structures in a small business

Sep 29, 2023

A waterfall structure is a way to dictate how distributions from a small business flow to investors and management. This article covers common waterfall structures in a small business acquisition.

Buying a business as an asset purchase

Sep 24, 2023

With most SMB acquisitions being structured as asset sales, this article gives an overview of what an asset purchase means and how it impacts taxes and liabilities for the buyer and seller.

Understanding working capital in a small business

Sep 19, 2023

Although many small business sales are done cash-free, debt-free, working capital is critical to understand as a business buyer. In this post, we explain what working capital is, show how to calculate it, and how to ensure you’re covered.

Can an EIDL loan be transferred in a business sale?

Sep 18, 2023

Many small businesses still have outstanding EIDL loans issued during the pandemic. This leads to confusion over whether business buyers can assume these loans and use them as a cheap cost of financing.

Small business fundraising: 506(b) vs 506(c) offerings

Sep 12, 2023

Many self-funded searchers plan to raise capital to fund the purchase of a small business. This article explores raising capital through 506(b) vs 506(c) offerings under Regulation D.

Small business investing: cash flow vs. appreciation

Sep 11, 2023

Small business investors typically choose opportunities based on their ability to generate cashflow or increase in value. This post reviews investing for cashflow vs appreciation.

Buying strategy: executing a small business roll up

Sep 7, 2023

Small business roll-ups are becoming more popular as individuals leave private equity and look to buy Main Street businesses. This article explores this buying strategy and outlines tactics for rolling up SMBs.

How much does a quality of earnings report cost?

Aug 30, 2023

Many small business buyers are ordering quality of earnings reports during due diligence. This post reviews the purpose of QoE reports as well as their typical cost for a small business acquisition.

What is a full standby seller note?

Aug 29, 2023

With interest rates increasing, more seller notes on being put on standby. This post reviews full standby seller notes, why they are used, and their pros and cons.

Questions to ask when purchasing a small business

Aug 23, 2023

This guide covers the questions to ask of a business owner when considering acquiring an existing small business. Commonly referred to as "due diligence", these questions will help you determine whether the business is right for you.

The rise of acquisition entrepreneurship: a third path

Aug 22, 2023

The past few years has seen of surge of activity in people pursing entrepreneurship through acquisition: the process of buying a business instead of building one. This post explains what goes into ETA.

Seller financing in business acquisitions

Aug 21, 2023

This post covers how self-funded searchers and acquisition entrepreneurs use seller financing to fund the purchase of a small business.

What is a preferred return in a small business acquisition?

Aug 17, 2023

For acquisition entrepreneurs looking to raise investor capital to fund a business acquisition, the concept of preferred equity can be confusing at first. One common piece of any investor-funded acquisition is a preferred return.

Top books on buying a small business

Aug 16, 2023

A guide to books on buying a business. From Buy Then Build to the Messy Marketplace, these are the must-reads for acquisition entrepreneurs.

Taxes, loans and acquisitions: How outstanding loans are treated in a business sale

Aug 15, 2023

With many small business acquisitions being cash-free, debt-free, it's important for business buyers to understand how outstanding debt impacts a seller's after-tax proceeds from a sale.

Sources and uses in a small business acquisition

Aug 8, 2023

A sources and uses analysis tracks where funds will come from and how they will be used to close on a business acquisition.

Licensing requirements for buying an auto shop in California

Aug 3, 2023

This post dives into the licensing requirements to buy and own an automotive repair shop in California.

What is an equity step-up?

Jul 26, 2023

This post outlines how an equity step-up is used to calculate investor ownership in a business acquisition.

A quick guide to working with an attorney to acquire a business

Jun 21, 2023

Attorneys are crucial members of any deal team. This post outlines how to work best with your M&A attorney during an acquisition.

A brief overview of the world of independent sponsors

May 17, 2023

This post gives an overview of the independent sponsor model of business acquisitions and highlights the differences compared to private equity and self-funded search funds.

The best industries for buying a small business in 2023

May 8, 2023

This blog post explores the top industries for buying a small business in 2023, including business and consumer services, based on M&A activity and macroeconomic factors.

Licensing requirements for buying an HVAC business in Texas

May 2, 2023

This post provides an overview of the licensing requirements for individuals to purchase and operate an HVAC business in Texas.

The pros and cons of buying an auto shop

May 2, 2023

The auto repair business is one of the largest industries in the U.S. This post highlights the pros and cons of buying an existing auto shop.

The top self-funded search fund investors in 2023

May 1, 2023

This post highlights the top funds, syndicates, and angel investors for self-funded small and medium-sized business (SMB) acquisitions in 2023.

How long does it take to buy a business?

Apr 28, 2023

This post outlines the timeline for buying a business, including the phases and factors that affect how long it takes.

IOI vs LOI: Comparing an Indication of Interest and Letter of Intent

Apr 27, 2023

This post explores the differences between Indications of Interest (IOIs) and Letters of Intent (LOIs) in the context of business acquisitions.

How to find businesses for sale

Apr 26, 2023

This blog post outlines the various methods to find businesses for sale, including online marketplaces, networking and referrals, and direct outreach.

Types of loans to buy a business

Apr 25, 2023

This post discusses the various types of loans available for financing the acquisition of a small business, including SBA loans, home equity loans, seller financing, 401K rollovers, and personal loans.

Escrow agreements in a business acquisition

Apr 24, 2023

This blog post discusses the use of escrow agreements in small business acquisitions, and how they can provide a secure way to hold funds or assets until certain conditions are met.

Differences between a traditional search fund and a self-funded search

Apr 23, 2023

This post explores the differences between traditional search funds and self-funded searches for entrepreneurs looking to acquire small businesses.

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