Out of all the businesses listed for sale, only about 30% to 40% ever sell. There are many reasons why your business sale may fail to go through. It could be that your business is bleeding cash, you have overpriced it, you have irreconcilable flaws, or you lack a professional business broker.
Now, if you’re trying to figure out how to sell your business for its maximum price, we have a guide for you. Read on to find out what goes into selling a business and how a business broker can help the process.
Start by Finding a Professional Business Broker
When selling a business, you basically have two options to consider. Sell your business on your own or use the services of a professional business broker. Selling on your own would be a great option if you were to sell it to a family member or a trustworthy person.
However, if you’re putting your business on the market, hiring a professional broker would be your best bet.
A business broker will bring a wealth of experience in selling businesses and will know all the secrets of how to sell a business successfully. They’ll come armed with the skills, expertise, and competence necessary to cover all areas of the sale.
One of the best things about hiring a business broker is the fact that they’ll maintain confidentiality. During a business sale, keeping your business information confidential is essential. It could potentially ruin your company’s future if released to the public.
A professional business broker will only release sensitive information to buyers who are ready.
A broker could also keep your company’s name from potential buyers, protecting you and your business in the process. Having a broker take care of the business sale means that you’ll have time to maintain internal focus and prevent disrupting the business.
Even better, a broker will have an extensive contact base and a vast network, so finding potential buyers will be easier and will take less time. Finally, a business broker has experience in negotiations. They’ll scrutinize business contracts, and you’ll be assured of a smooth sale and transfer of ownership.
Determine Your Business Valuation
You may think that you have an idea of how much your business is worth. However, a lot of entrepreneurs have found that the number in their minds is way off the mark of the actual value. This makes a business valuation process imperative before listing a business for sale.
You see, overpricing means it could stay in the market too long, and underpricing means that you could go at a loss. The valuation process involves hiring a valuation expert to calculate a realistic estimate.
They’ll offer you a detailed report and documents showing you approximately how much you should sell your online business for. One good thing about a business valuation is that it will help you give credibility to your asking price.
Now, a business valuation is not something you wish to go through yourself. However, if you do, there are three valuation methods. You can use the market value approach, asset-based approach, or earnings value approach.
Still, there are many other factors to consider. Things like business debts, industry trends, and similar companies for sale. If you decide to hire an appraiser, your business broker will help you find a professional within their network.
Get Your Finances in Order
Now that you have already determined the value of your business, it’s time to get your finances in order.
When you decide to sell your business, understand that it will put a lot of prying eyes on your financial records. Get ready to accommodate not just potential buyers but lawyers, accountants, and valuation firms.
To ensure that your business sale goes through seamlessly, make sure that your bookkeeping is immaculate in advance. Most potential buyers will ask to see accurate financial statements and tax returns from at least three years.
Financial statements will include anything from cash flow statements, income statements, balance sheets, and the like.
Understand that if your finances are disorganized, it’ll be a potential red flag for potential buyers. Any inconsistencies will also raise a plethora of questions. Bring in a professional bookkeeper if you don’t have one already and make sure that everything is in order.
Look for Pre-Qualified Buyers
One of the best things about having a business broker when selling a business is that they’ll help you get pre-qualified buyers.
It’s essential for you to find multiple buyers who are already pre-qualified for several reasons. One of the most significant reasons is that you’ll be disclosing sensitive business information.
Such information could be worth a fortune if it got out to your competitors. It’s possible that one of your competitors or someone acting on their behalf will make an offer just to check out your finances. Beyond that, most business transactions rely on third-party loans.
If the loan is denied, the sale will not push through, and you’ll be back to square one.
On average, it takes about six to eight months for a business to sell though it could be easier with a professional broker. In the meantime, keep increasing your business value for better offers.
The length of time it takes could also depend on whether you’re selling to an individual buyer, a strategic buyer, or a private equity group. Individual buyers may need a loan while private equity groups could fund the purchase themselves
A professional broker will also leverage multiple buyers to get the maximum value for your business.
Finalize the Process
When you finally find a qualified buyer, finalizing the process will involve signing contracts and getting legal documents in order. This is where your business broker really comes in handy because the process can be confusing, if not messy.
It’s also advisable to have your business lawyer present. They’ll handle all documents associated with the sale. These include asset listings, the non-compete agreement, bill of sale, security agreement, and purchase agreement.
Once they have everything in order, all you’ll have to do is sign the agreement, and your business sale will be complete.
A Detailed Overview of How to Sell Your Business
Now that you have some basic understanding of how to sell your business, go ahead and search for the best broker in your area. That said, if you’re looking for professional brokers to sell your business, get in touch with us, and we’ll embark on this journey together.Read More
Eventually every business owner will have to turn over control of their business to someone else. There are many options for how this can play out. They range from selling the business to a prospective buyer or selling to a competitor, to turning your business over to a family member. It is key that you start thinking about these options years before you end up in a situation where you actually have to sell.
Working with a Business Broker or M&A Advisor is one way to determine what sales options are optimal for you based on your specific situation. Let’s explore some of the variables you’ll want to consider when you decide to transfer your business to a family member.
There are some significant advantages to transferring your business to a family member. No doubt topping the list of advantages of going this route is the fact that the transfer can be considered a gift. One advantage of this approach is that you’ll reduce your real estate taxes. Depending upon how the agreement is written, you also may be able to maintain some control over the business. For many business owners, this factor can be a big advantage.
One issue you’ll want to explore when opting to transfer your business to a family member is seller financing. Seller financing is a common practice when it comes to buying and selling businesses in general. This type of financing is even more common where transfers to relatives are concerned.
Seller financing opens up the versatile option of implementing a private annuity. A private annuity can serve to spread payments out across a long period of time. This could be a win-win situation for both you and your relative. You would receive a long-term stream of income as a result of ongoing payments. In turn, this decision may very well make ownership more financially realistic for your relative.
Keep in mind that if you sell your business to a relative, this in no way negates the need for a buy-sell agreement. Even when you are dealing with your most trusted family members, legal agreements must be firmly in place. A buy-sell agreement is an invaluable tool that protects everyone involved.
This contract clearly outlines all aspects of the arrangement. Your buy-sell agreement should include such key information including the value of the business, amount being paid, information on which employees will be retained, the current business owner’s level of future involvement, and much more.
Working with Professionals
Ultimately, there are a range of potentially powerful benefits associated with transferring a business to a relative. While it is true that you can expect the IRS to closely evaluate the sale, this should not dissuade you from considering this option. Business Brokers and M&A Advisors are experts at buying and selling businesses, and they understand the specifics of transferring a business to relatives. Working with professionals early in the selling process can help you gain tremendous insight into the best way to proceed.
The post Important Points for Selling to a Family Member appeared first on Deal Studio – Automate, accelerate and elevate your deal making.
After decades of hard work, selling your business can be an exciting and rewarding time. Yet, many business owners overlook the importance of focusing on the legal matters associated with sales. In this article, we’ll explore three of the most significant mistakes sellers make.
1. Use an NDA
The first critical mistake that business owners should be guarding against is skipping the use of a non-disclosure agreement. Simply stated, a business owner should always make sure that a non-disclosure agreement is in place before disclosing to any buyers that a business is on the market.
NDA’s stand as an invaluable way to restrict who does and does not know your business is for sale. After all, the last thing any business owner looking to sell his or her business wants is for competitors or employees to learn confidential information.
2. Hire an Attorney
The second critical mistake that many business owners make is they skip working with an attorney. There is no way around the fact that if you are selling a business, or for that matter anything of significant value, you need to work with a lawyer experienced in the area of sales.
Business owners become accustomed to doing a great many things themselves and learning on the job. There is no doubt that this is a personality trait that has served them well over the years. However, when it comes time to sell your business, there is zero room for “on the job training” or relying on your own instincts. One of the best ways that you as a business owner can protect your future is to work with a lawyer when selling your business. In fact, a Business Broker or M&A Advisor can be a vital resource for helping you to find a proven lawyer with a background in the buying and selling of businesses.
3. Get a Letter of Intent
A third significant mistake that business owners frequently make when selling their business is that they fail to get a letter of intent. Much like an NDA, a letter of intent is a key legal document in the process of selling a business. All too often business owners will skip requesting a letter of intent out of fear of slowing down the process and potentially disrupting a deal.
The letter of intent is designed to both clearly spell out expectations, while simultaneously protecting your interests as a business owner. When a buyer signs a letter of intent, it indicates that he or she is taking the process seriously. This will protect you from wasting your time.
The process of buying or selling a business is complex in many different ways. Whether it is dealing with human psychology, organizing your books, thinking about what information prospective buyers are likely to want to see, or addressing a wide array of legal issues, it is a complex and time-consuming process. Working closely with a Business Broker or M&A Advisor is one of the fastest ways that you can increase your chances of a successful sale.
The post How to Circumvent Three Legal Mistakes Sellers Make appeared first on Deal Studio – Automate, accelerate and elevate your deal making.
Are you thinking about selling your business? Wondering what a business broker can do to help?
If you’re thinking about selling your business, you may be tempted to go through the process alone. However, working with a business sale broker can be a great help and can make the entire process much easier overall.
If you want to learn more about how they can help you sell your business, read on. Here’s what a broker can do for you.
1. Valuate Your Business
One of the main things that a business broker can do for you is that they can evaluate your business and determine how much it’s worth.
Valuating a business is easier said than done because a lot of things go into determining its value. A broker will take all necessary factors into account including cash flow, business location, competition, and a business’ unique value proposition.
As a seller, a business broker can help you determine the highest amount that you’ll be able to get for your business and can then help you do everything you can to find a buyer who will pay that price.
2. Help Sell a Business With Confidentiality
When working with a broker, it’s important to remember that confidentiality will be taken very seriously.
When customers, employees, and competitors learn that your business is being sold, it could cause problems and lead to a reduction in profitability. A broker can work to help you sell your business but they can do it in a covert and confidential way that won’t affect its operation.
If you’re not using a broker, maintaining this confidentiality while attempting to find buyers can be much more difficult.
3. Market Your Business For Sale
One of the best things about working with a broker is that they’ll have a strong network and will know how to help market your business listing effectively.
A broker will have a strong network and will have access to a wide range of potential buyers. They can market your business sale to this network and to a variety of people who could be interested in your business.
A great broker will understand the market for your business and will know where to look to find potential buyers. They can help you to find more buyers than you would be able to find on your own and can make it more likely that you’ll find a buyer who will pay a high price.
4. Qualify Buyers
Another thing that a business broker can do is qualify buyers.
When selling a business, not just any buyer will do. Many people who show interest in buying a business aren’t serious about it or can’t get the necessary funds to complete the purchase.
Fortunately, a broker can help qualify a business buyer based on their professional experience as well as on their finances. A broker will help make sure that any buyers who show interest in your business are serious and realistic about what owning the business will entail.
A broker can help find a great buyer by ensuring that they have a true desire to buy a business, understand the ins and outs of business ownership, and are motivated.
5. Provide Expert Guidance
One of the best things that a broker brings to the table when working with a seller is years of experience and expertise. A business broker will have been through the process of helping buyers sell a business many times and have explored many strategies for finding a suitable buyer.
The experience that a broker has can be very helpful, especially since many people who sell businesses will be doing it for the very first time. By relying on this extensive knowledge and expertise of a broker, you’ll have an easier time selling your business than you would have otherwise.
6. Help Buyers Finance a Purchase
Another thing that brokers do is help buyers secure financing. A broker can help ensure that the buyer has everything they need to buy a business successfully.
This can benefit sellers as well since it will make it more likely that a buyer will be found who will be able to successfully purchase your business. It can also help a business to sell more quickly.
If seller financing is offered, the broker can help to sort out the details with the buyer and seller. Setting up seller financing and working out the specifics can be tricky, so working with a broker can be useful.
7. Help With Legal Requirements
One of the best things that a business broker can do for you is that they can help you to navigate all of the legal requirements of selling a business. They can also help you collect any necessary documents you’ll need during the sales process.
A broker can help you price your business and negotiate with buyers and structure a deal. They can also help you to take care of all the necessary paperwork and ensure that you don’t miss anything important.
Dealing with all of the legal ins and outs of turning over a business to a new owner can be complicated and can be frustrating to deal with on your own. Working with a business broker can help reduce your stress and can help you to sell your business with minimal headaches.
Making the Decision to Work With a Business Broker
If you’re thinking about selling your business, you should consider working with a business broker. They can help you sell your business effectively and will give you the best chance of getting a great price for it.
Are you ready to sell your business? Contact us today to learn more about how we can help.Read More
You understand the finer points and potential of your business better than anyone; however, that doesn’t mean that prospective buyers will instantly see your business’s various strengths. When you are looking to sell your business, you have two very important jobs. The first is to get your business ready to be sold. A second essential job is to showcase your business’s greatest strengths. At the end of the day, you must be the one to articulate why your business is worth buying. This effort, of course, will be supported by your Business Broker or M&A Advisor.
Understand Who Will Buy Your Business
Most people have never sold a business before and don’t fully understand what is involved in positioning one’s business for sale. The bottom line is that not every business is a good fit for every buyer. Finding the right buyer for your business will greatly expedite the process. This is yet another reason why it is critically important to work with experienced professionals. Business Brokers and M&A Advisors not only know what buyers are looking for, but also what sellers need to do to get their business ready to sell.
How to Navigate Roadblocks
Selling a business, especially if you attempt to do so without professional help, is a very time-consuming and often draining process. Successfully running a business requires attention to detail and focus. Unfortunately, these can both suffer when owners attempt to put on yet another hat and handle the sale of their business.
While you are attempting to sell your business, it is critically important that you maintain normal operations. The last thing you want is to weaken the finances of your business while you are waiting to find a buyer. Remember that it takes months, a year, or even longer to find a buyer for the typical business. Don’t let your business suffer damage in the interim.
Think Like a Buyer
Preparing your business to be sold isn’t as simple as making a few cosmetic changes and calling it day. Instead, you’ll want to think like a buyer.
What would you want to see if you were buying a business? You would want to know a great deal about that business and how it operates, who its key employees are, how likely those key employees are to stay, who the main customers and suppliers are, and the strength of the business location and competitors. Of course, you would also want a very detailed picture of the business’s financial situation.
In short, you would want to clearly understand what the business does and what it’s really worth, how financially healthy it has been in the past, what the business’ prospects are moving forward and, in general, how much effort the business will take to operate. These are exactly the kind of key facts that any serious buyer will want to know. It’s only to be expected that a buyer would expect to learn this information before making a decision.
At the end of the day, working with a Business Broker or M&A Advisor is one of the easiest ways to streamline the sales process. Thanks to years of experience, they already understand the pitfalls that you may experience as well as what is needed to position your business so that you can find the right buyer quickly and receive the best price possible.
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