Read This before Selling
We have worked with hundreds of sellers over the years, and our experience tells us that there are five important questions that every Seller should address before placing their business on the market:
When is a good time to sell my business?
A number of considerations must be carefully thought out before making the actual decision to sell. Businesses do not sell overnight. Generally it takes time to properly market a business, and expose it to sufficient buyers to ensure the very best price possible. Therefore, you must allow for this time constraint as part of your overall plan to sell.
Has your business been properly prepared to go on the market? Are your books and records up to date? Has the building and equipment been properly maintained? If there is a premises lease, is it assignable to a buyer? Are all permits and licenses in place to operate legally? We have a complete check-list for your convenience in doing a comprehensive job of showcasing your business to the most persnickety buyers.
What is the overall condition of your local market, your industry, and the national economy? Is this the right time, or are you better off waiting for a while until these uncontrollable factors are in your favor?
Are your sales or revenues consistent, or are they affected by the ups and downs of seasonal issues? There are other factors to consider such as your health, personal issues, and motivation to retire. We have worked successfully with Sellers concerning these and many other issues over the years, and we are confident that we can prepare a sales package that will be to your liking.
Can my business be sold?
All businesses can be sold it just comes down to terms and price. Therefore, it is extremely important for you to understand the Strengths, Weaknesses, Opportunities, and Threats that will apply in setting the right price, terms and conditions to the sales package. Once all issues have been flushed to the surface we can separate all problem areas for creative solution. Once this is accomplished we find that successfully selling your business is nothing more than applying our comprehensive marketing program to the task of exposing the business to as many potential buyers as possible. When properly priced, packaged and marketed, most businesses sell in less than one year.
How much is my business worth?
This is the most important part of the process of selling one’s company and in most cases the most disappointing part of the process. As a smart and savvy business owner you have always tried to keep the profits low to pay the least amount of taxes. Yet when a buyer is seeking to purchase a business he is looking for a history of profit.
To gain an accurate valuation of your company we perform a recast of your financial data to determine a true profit number which allows us to determine a selling range for your business. Despite the various valuation methods and rules of thumb that are used to price businesses, the ultimate selling price is very heavily weighed by the motivation of the Seller and the Buyer.
In certain unique situations we might even recommend you get an outside opinion from a Certified Business Appraiser. In those rare occurrences we would deduct that cost at the time of the sale.
What is the sales process?
There are many steps required to accomplish a successful sale of a business. Following is a brief outline of some of the major steps involved:
- Assisting the Seller to prepare the Business for market
- Reviewing all financial information and developing a Cash Flow adjustment
- Determining a reasonable fair market value for the Business
- Execution of a sales agreement with the Broker
- Broker then prepares a sales and promotion package
- Business is exposed to a comprehensive marketing program
- Broker interviews prospective, qualified Buyers who have signed a Confidentiality Agreement
- Buyer visits the Business for a premises inspection
- Buyer makes an offer to purchase
- Broker negotiates a “meeting of the minds” between the parties
- Buyer financing package is submitted (if appropriate)
- Buyer due diligence is performed on the Business
- Purchase Agreement is finalized
- Closing Occurs: Seller gets his money The buyer get the keys
- Seller begins training Buyer in all aspect so the Business.
- Seller and the Buyer start new dreams.
What marketing steps are involved?
Empire offers a comprehensive marketing program that includes many of the following approaches to obtain qualified Buyers:
- We prepare a synopsis in generic format for distribution to our Buyer database.
- Business Listings are placed on various Internet websites that are tied in to numerous search engines.
- Local Multiple Listing Service exposure is also provided.
- We have a policy of co-brokering with all other Business Brokers.
- Newspaper advertising
- Targeted emails to known Buyers
- Targeted emails to Accountants and Attorneys
Targeted mailings to synergistic Buyers
No Broker can pin-point exactly when a Business is going to sell. Besides taking all the steps that have been mentioned previously above, there are always the elements of luck, and chemical vibes between the Buyer and the Seller that cannot be pre-determined. Generally speaking though, about 80% of small to medium sized businesses sell within six months provided that they have been properly priced and marketed. The remaining 20% may take longer due to issues such as a poor location or some other inhibiting factor beyond the Seller’s control.
We know what it takes to sell businesses, but they are not magicians. Businesses that are overpriced, and have other structural challenges to contend with will take much longer to sell. Ultimately, the marketplace determines the price of a business, and both the Seller and the Broker need to be sensitive to this fact. Our job at is to bring value added to the table. We pride ourselves on quality and reputation, and we would be welcome the opportunity of working with you.