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.