Seller FAQ

If the sale is handled well, a business can be sold at any point in time. However, in order to get the most profit from the sale, it’s best to sell it when the business is prosperous and has not peaked yet.

The value of a business varies between industries and is contingent upon many factors- such as the economy, location, growth potential, competition, equipment condition, building condition, assets, cash flow, and financial history. Using our expertise in the market, we will evaluate the industry and your company to determine an honest approximation of its worth.

Businesses lose value for two primary reasons when waiting to be sold – management loses focus or reduces investment in marketing. Make sure strong, positive and focused leadership is in place until the very day your business is sold. Deal with any problems to make sure they are fixed before the sale like cleaning up the financial records, writing off bad debt and discarding obsolete inventory and equipment.

Technically, you could. However, the emotional strain, time away from the business, and cost of marketing and selling tend to be overwhelming for most business owner. In addition, many business owners find they have a hard time selling their business due to a lack of known potential buyers, determining the business value and managing all the complexities involved. They also find it hard to work with buyers while keeping the process confidential. These factors can cause the business owner to either lose the sale or sell the business for much less than they could have gotten through a broker. An IBBA study showed that the average sale price is 20% higher for businesses sold by an industry professional.

Each buyer’s needs or requirements for a business are different. Here are 14 items that your buyer may consider.

1. Reason for the Sale – Buyers are afraid of failure and unknown complications. They want a logical reason for the sale.
2. Income – Will the buyer be able to live comfortable on the wages from the business after their expenses, rent and loan payments?
3. Business Books & Records – Buyers want hard proof of taxes filed, profit & loss statements, sales tax payments, proof of sales, etc.
4. Price – If the price isn’t reasonable, the buyer won’t buy. (Ask us about the Acid Test.)
5. Terms – Many small businesses are financed by seller financing. Most banks will not finance a small business sale unless it is an SBA loan. Seller financing shows the buyer that the seller believes in the growth potential and future of the business he is selling.
6. Lease – Everyone wants a great lease. Agreeing to help the buyer transfer the lease or obtain a new one will make the buyer more receptive.
7. Non-compete Agreement – Agreeing not to open a competing business within a certain distance and for a certain amount of time will make buyers more comfortable and may have tax benefits for both sides of the transaction.
8. Inventory List – Buyers will want a list of all the furniture, fixtures, and equipment that will be included in the sale. Along with the records & books, this helps to validate the pricing of the sale.
9. Training/Background Knowledge – Many buyers overlook potential businesses due to lack of background knowledge in the industry. Making training available to the new owner will help increase the chances of your business being sold.
10. Appearance – Businesses that look neat and are in good repair are more likely to sell fast and to receive close to their full asking price. Potential buyers will lower their bid to compensate for businesses in obvious need of repair or major updating.
11. Time – Buyers usually have more than one business they are considering at a time. Since bids can be removed at any time, responding quickly to an offer will insure your buyer doesn’t decide to move on to someone else.
12. Surprises – Buyers don’t like surprises. Most problems can be worked around or through if they are known in advance disclosing everything early in the process.
13. Negotiating – Our professionals work to turn any issue into workable solutions. We will help you navigate through contract negotiations for both the buyer’s and seller’s benefits.
14. Buyer’s Assistance – Most buyers & investors have never bought a business before. They are often nervous and hesitant to proceed. We provide potential buyers assistance through every part of the buying process to smooth the way. We educate and prep them for quick action and help them think through the process in a logical and balanced fashion.

If you are contemplating selling your business, you need to have an exit plan in place. It’s a realistic, action packed calendar of plans/measures that help ensure your business will continue to thrive and grow as you pass it on to the next owner. Your exit plan may change as your personal life and your business changes. Your exit plan will cover how to handle legal issues, human resources, taxes, finances, operations, and business strategy. It will also cover the following questions:

1. When do you want to leave the business? How do you prefer to leave? (merger, buyout, sale/gift of business)
2. Is your family involved in the business? What are their plans?
3. How does your retirement plan look? What do your finances look like?
4. How much is your business currently worth?
5. How you can prep the business for sale, including increasing its value?
6. What will you do with your time after the sale of the business? Will you need another source of income or will the sale meet your financial objectives?
7. How are you going to handle estate, trust, and tax issues related to the sale?

The traditional techniques and skills used to sell real estate are vastly different from the ones used to sell a business. Although a real estate agent may be licensed to sell, he may not know how to price, attract and screen the right buyers, obtaining financing, structure the deal and complete the transaction. Nearly all business owners prefer a private and confidential sale. Placing a “for sale” in front of your business may embolden competitors and harm employee morale