Secrets of the Sale (A Practical Guide for Sellers)

Before Meeting with Broker You Should …

  • Write down your goals for the sale. Know what you must net from the sale.

  • Review everything you’re selling. Is it organized?  Working?  Does it look good?  Is it necessary? Is it clean?

  • Fix things that must be fixed.

  • Spruce up areas that have run down.

  • Know what you need to achieve.

Before Meeting with Buyers We Will …

  • Prepare to prove the value of your business to naturally skeptical Buyers.

  • Prepare a suitable transition plan that’s fair to the buyer and realistic based on the complexity of your business.

  • Prepare to search for the right buyer.

  • Prepare a compelling presentation.

  • Price it fairly in today’s market.

  • Position it in market for the best advantage.

  • Promote it aggressively yet confidentially.

  • Promotion: Highlighting the Positives!

Important Concepts…….

  • Confidentiality is vital when selling a business to protect its value.

  • Relationship between Buyer and Seller is ongoing after closing.

  • Credibility of all material information supplied by Seller is vital.

  • Patience is rewarded. In time, the right buyer will be found.

About Deals……. 

  • The higher the down payment requirements, the fewer the qualified prospects.

  • Most Buyers don’t really know how to value your business. Burden of proof is always on the Seller.  It’s not personal!

  • Up front disclosures are a must to avoid deal-killing surprises.

  • Negotiation is normal. It’s not personal!

  • Surprises are deal wreckers!

Deal Roadblocks…..

  • Price appears to be too high, aka Price Not Justifiable.

  • Revenue or earnings not clearly provable.

  • Seller won’t provide some small % of financing OR train OR non-compete.

  • No manager who can run daily operations.

Why Do Buyers Make Offers?

  • Buyers make offers to get the Income they need for their lifestyle.

  • To get a good deal.

  • To gain self-esteem from pride of ownership.

  • Believe they can get the capital to buy it.

  • Believe they can successfully run your business.

Common Red Flags for Buyers…..

  • Representations or omissions, even minor, that prove to be both wrong and bad for the Buyer.

  • If it’s so good, then why is it for sale?

  • Fear that Seller may not really be getting out of this industry and might become a competitor.

  • Feeling that the business may be too hard for buyer to really learn and control.

  • Unreported Revenue and unreported expenses.

To Get the Deal Done Buyer Concerns must be met.  What’s next?

  • Parties enter into a “conditional” contract.

  • Buyer investigates Seller’s proof of earnings and other material issues.

  • Seller investigates Buyer’s ability to fund the purchase and to make payments.

  • If and when both parties are satisfied and financing is approved, the contract becomes firm.

Closing and Beyond………

  • Closing is scheduled based on availability of funding and to suit the parties.

  • In preparation for closing lien searches are conducted regarding the assets being sold, including title searches if real property is involved.

  • In order to close Seller must show proof of clear title – free of claims from creditors, judgments, equity holders, third party interests, and marital interests.

  • After closing, most Sellers and Buyers will have an ongoing relationship that includes Buyer making payments to Seller and Seller familiarizing Buyer with business.

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