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13 Crucial Steps For Selling A Business
Have All Records Ready Before You Go To Market!
Have these items ready before the business goes on the market to
be sold: The last 3 years of federal tax returns for the
business being sold, the last 3 years of financials (profit &
loss statement, balance sheet), the last 3 years of monthly bank
statements, copy of current lease, list of all equipment being
sold with the business, etc - many parties during the selling
process will need this info - serious business buyers, your
landlord for a new lease for the new buyer, lenders (for a
possible loan/financing for the buyer, note buyback firm (in
case you want to sell the note for cash after the business
sells). Also make sure you know what the correct Adjusted Net
income has been for the last 3 years. Serious business buyers
will want to know this. Adjusted Net income is: Net Income +
Owners Salary + Depreciation + Interest Expenses + Other
Business Expenses Written Off (Deducted) That May Not
Necessarily Be Business Expenses To The New Owner Of The
Business.
Have A Professional Business Valuation Performed
Getting a 3rd party professional business appraisal/valuation is
important and critical for the process. 70% of all businesses
NEVER SELL usually due to too high of price (and/or a bad deal
structure) placed on the business being sold. Getting a
professional 3rd party valuation is well worth the expense and
will be utilized by many parties during the selling process:
possible business buyers, lender/financing companies for the
buyer, and others.
Keep A Folder Of All Info/Contacts
Keep a folder of all contacts, notes, and paperwork for your
business for sale transaction. Keep a log of all buyers who
contact you - get their phone numbers, email address and keep
notes about them (this will come in handy down the line, trust
me). You want to make sure you have backup buyers in case your
first choice drops out during the selling process. Keep all
escrow info, purchase agreements, signed
non-disclosure/confidentiality forms, contact phones of CPA's,
Attorneys, etc. and other pertinent data/info in this folder!
Write Up A Comprehensive Summary Of The Business
Buyers are going to need to know many details about the business
being sold. Instead of having to re-explain to many buyers about
the business (and probably forgetting many important facts) make
a one page summary of the business being sold. Include: History
of the business, date established, number of employees,
important attributes about the business and surrounding area,
what you would recommend to a new buyer to increase business
once they take over, what geographic area the business covers,
the competition, the reason for selling, how much training will
be provided after the sale, etc.
Confidentiality Agreements Are Important
Have all potential business buyers sign and date a
Non-Disclosure/Confidentiality Agreement before giving out any
info. Make sure potential buyers understand how important it is
to keep the sale of the business confidential and that there are
legal ramifications if they don't.
Get Controlled Maximum Exposure On The Sale Of The Business
One of the most important items is to make sure that many, many
buyers (ones that are qualified to buy) see the business is for
sale. Expect to spend $1000-$3000 for advertising and marketing
to adequately get the word out to the right business buyers. Yes
it does only take one buyer to buy the business, but you want to
make sure you have multiple buyers (and backups if possible)
ready to go!
Check Out The List Of Businesses WANTED To Buy Frequently!
Check out this list frequently at www.USABizMart.com in the
Resources Section. This is a list of serious buyers who are
looking for specific types and locations of businesses for sale.
Contact them only if you have something for sale that matches
their criteria.
Get The Business You Are Selling Pre-Qualified For Financing
You are probably saying "that is the buyers responsibility to do
this!" You couldn't be more wrong. This is a critical step in
insuring that possible buyers can get financing in the first
place to buy the business. This is highly important, since if a
buyer can't get financing from a lending institution that means
the owner will have to take back a note, or sell the note after
it sells for a discount etc. By doing this step early you will
know what some very important options will be for potential
business buyers without a lot of time being wasted - and TIME
KILLS DEALS! Get this step done before you go to market - take
your package of info to www.bizbuyfinancing.com
Keep The Negotiating & Communications Moving Forward!
Remember - TIME KILLS DEALS. Make sure when you are negotiating
the contract, allocation of purchase price, new or restructured
lease, etc. always be moving forward. Don't let any situation
sit too long - it will most likely kill the deal!
Get The Signed Purchase Agreement Into Escrow
Get the signed purchase agreement into escrow immediately and
sign off any contingencies quickly - remember TIME KILLS DEALS.
Make sure you go through the Allocation of Purchase Price in the
beginning of the escrow process not at the end which happens
most of the time.
Due Diligence By The Buyer Should Not Last Forever!
Due diligence by the buyer should only last 4-14 days. Since you
are going to be organized and ready with all important info and
documents, this is all the time any competent business buyer
(and CPA for the buyer) should need to investigate the business
for sale. You do not want the business off the market for a
prolonged period so be firm about the length of time for Due
Diligence - get it in writing (purchase agreement) and make sure
all parties to the transaction stay with the schedule!
The Business Is Not Sold Until You Have Check In Hand!
Always continue to collect names of business buyers and their
phone numbers etc. even if you are in escrow (50% of all deals
fall out for one reason or another!) You want to make sure you
have a successful deal and a business buyer that is going to
complete the deal. Try to have 2-3 potential business buyer
back-ups who are willing to take the buyers place within the
escrow should the current business buyer drop out.
Keep A Positive Attitude - It Will Happen!
Keep calm and a have a positive attitude. By following the above
steps you will definitely find a qualified buyer for your
business! Things happen pretty quickly when selling a business.
If you are prepared, follow through with all buyers
professionally and keep up on the selling process, you will be
successful!
Peter Siegel, MBA - All Rights Reserved
http://www.BizBen.com * http://www.USABizMart.com
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About The Author: Peter Siegel, MBA is the Founder & Principal
of BizBen.com - California Businesses For Sale and
USABizMart.com - USA Businesses For Sale, two of the most
popular business for sale related websites on the internet. He
is also the author of three books on the topic of business sales
and business buying. The most current book is "Businesses For
Sale - How To Buy Or Sell A Small Business". Mr. Siegel also
writes a daily Blog - at www.USABizMart.com/blog that covers all
topics on selling, buying, valuing, and financing businesses.
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About the author:
About The Author: Peter Siegel, MBA is the Founder & Principal
of BizBen.com - California Businesses For Sale and
USABizMart.com - USA Businesses For Sale, two of the most
popular business for sale related websites on the internet. He
is also the author of three books on the topic of business sales
and business buying. The most current book is "Businesses For
Sale - How To Buy Or Sell A Small Business". Mr. Siegel also wri