For Business Sellers
As a business owner, one of the most important decisions of your business career is the decision to sell your business.
There are many reasons why Owners sell. All are individual to each Owner and the following are just a few of the reasons or causes:
Owner's "burn out." It doesn't matter if it is after five or fifty years. Remember each is an individual situation.
- Get estate in order. This can be done at any age.
- No one available that wants to enter the family business.
- Not interested in investing additional long-term capital.
- Wants to step away from the business world, cash out and go fishing, at least for a while.
Whatever the reason, you need to plan on an orderly transition to new ownership, leaving you free to implement your plans for your future.
Most sellers do not realize the steps that should (or must) be taken to insure a successful sale.
Among the many steps necessary, we present the following as an incomplete sampling:
- Prepare a plan to sell before even thinking of selling. In other words, an Exit Plan.
- Be aware of just how important Confidentiality is in the process of the sale.
- Prepare yourself with a true Opinion of Fair Market Value, before committing to Asking Price.
- Prepare yourself, your business (appearance, equipment) and your financial records before going to market.
- Select the proper representative for the transaction. Only a Business Broker/Intermediary has the knowledge, experience, and tools to safely and properly bring the sale to a successful conclusion. The individual may not be as well versed in your particular industry, but he must be experienced and knowledgeable in the business brokerage and mergers & acquisitions profession.
Procedures must be in place so that your business is not harmed by premature disclosure about the sale. The professional Broker has developed non-disclosure forms, procedures and closed networks of other agents to ensure confidentiality.
It is usually necessary for you to have an estimate of value of your business. It can be provided by our members to assist you in your pricing strategy.
In order to present your business to a prospective Buyer, a written Business Profile must be prepared to show the facts. The presentation package includes pertinent facts about your company while still keeping the information truthful and in proper perspective.
There are many avenues available for the exposure of your business opportunity to prospective Buyers. However, there is no one method that fits all. The methods must be tailored to your specific business. The selection by your Broker may include some or all of the following:
- Listing Exchanges
- Newspaper advertising
- Direct mail
- Trade journal advertising
All these methods, in addition of course, to exposure to an existing, pre-screened, client base available to your selected broker representative. Of the above methods, none is more effective than the ability your broker has to cooperate with other CABB brokers and agents in the sale of your business. A good broker will make sure that all the other CABB brokers/agents knows your business is for sale, is priced right, and has a motivated seller. Some agent who knows about your business, working with his/her buyer client, is who will sell your business. Doesn't it just make sense that 200 agents working with buyers will have a better chance to sell your business than someone working alone? This can only happen among cooperating brokers. Ask yours if he/she cooperates. Ask to see his/her specific ads for your business which promote cooperation among brokers.
Your professional representative will guide the prospective Buyer and their agents, if any, through the follow up in the preparation of the offer and the resulting negotiation to the written and firm Agreement. Your representative proceeds in a timely manner, all the while preserving the integrity of your negotiating position to lock in the terms and price that is acceptable to you.
Close of Escrow
Once an Agreement has been signed, your Broker schedules and helps control the process from the Agreement to the time when you transfer possession and responsibility of the business and receive your full Consideration. During this critical time, deadlines must be met and conditions satisfied, along with the unexpected problems that are always possible.