Why Can’t I Just Sell the Business Myself?

Man and Woman Selling Business
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Almost any business can be sold – if the sale is professionally handled and priced to sell. 

When is the best time to sell your business? Waiting until after the business has peaked isn’t the best idea; this can cause the selling price to suffer – even in fast-growing economies. The best time to sell a business is when it’s doing well – I know – sounds easy right?

As I talked about in my last post, a company’s value depends on so many factors, i.e. cash flow, asset values, lease terms, equipment condition and the economy. All of these play a big role in selling your business.

Analyzing your business as well as comparable sales in your industry can be a daunting task.  That’s where a business broker comes in to play.  They can advise you on the proper pricing strategy for your business.

For larger businesses, a third party valuation must be considered. Why? Buyers will more likely pay top dollar for a business when there is documented evidence supporting the asking price. In fact, most financial institutions insist on a business valuation before they will even consider financing.

Why can’t I just sell the business myself?  I hear this all the time from business owners. What happens when they attempt to take this on themselves is the frustration, expense and time involved costs them more in the long run. Because they do not have a large enough pool of qualified buyers to choose from, they end up working with unqualified buyers who cannot follow through with the purchase and end up selling their business for far less than if they had worked with an intermediary.  Another factor of confidentiality comes into play when selling your own business; it’s difficult maintaining necessary confidentiality when working direct with the buyer. 

Seeking professional assistance when selling an asset as valuable as your business seems to be the likely choice but let’s look at why you should use a full-time professional business broker.

As the seller, you benefit in many ways from their services. These include: the ability to spend time managing your business instead of marketing it – maintaining confidentiality during the sale – step by step assistance throughout the entire selling process. 

Let’s take a deeper look at these benefits:

Time spent managing your business instead of marketing it. You can now keep your net profit up and maintain maximum sales price during the selling process.

Maintaining confidentiality. This helps to avoid alarming your clients, employees and suppliers.  It also keeps you from giving a market advantage to your competitors.

Step by step assistance. A professional business broker will provide all of these benefits.

With that being said – how do you choose the right business broker?

The rest of your life could be affected by the intermediary you choose to sell your business.  You should select a trained professional who specializes in the sale of business and understands your market.

Here are a few questions you should ask before making a decision to hire a business broker:

  • Are you a full-time business broker?
  • Can you tell me what type of training you have received?
  • What steps do you take to value my business?
  • Do you have a network of other full-time professionals who can offer my business to their qualified buyers?
  • Will my business receive any national and international exposure?
  • Can you tell me your success rate when it comes to selling correctly priced businesses?

In every step of the mergers and acquisitions process, we at LuAnn Capital pay attention to our clients needs. We listen. We respond. We’re more accessible to our clients than larger companies, whether the issue is small-business valuations, small-business marketing tips, exit strategies or other aspects involved in the process of selling a company.

The Process

Preliminary Stages

  • Face-to-face meeting to understand your company’s culture, management, strategy and goals
  • Perform full business valuation to determine your company’s fair market range of value
  • Timing is important in the sale of your business. We assess the best time to go to the market or determine if waiting will serve your interests.

Marketing

  • Develop and implement a unique marketing strategy for your company
  • Conduct searches to identify potential buyers with financial means to complete the sale
  • Confidential Business Review with detailed information about your business, is created (and approved by you) for review by potential clients
  • Contact potential buyers to sign a Confidentiality Agreement (CA) and verify their financial viability

Offer Stage

  • Create a time frame in which offers must be made
  • Discuss details with potential buyers
  • Provide potential buyers with information regarding Letter of Intent
  • Reach final agreement in a non-binding Letter of Intent
  • Negotiate Details

Between Offer and Closing

  • Follow a due diligence process
  • Prepare legal documents with outside legal support
  • Set a final closing date with the approval of all parties

Closing and Post-Closing

  • Attend closing at escrow to ensure all necessary final documents are in good order
  • Work with the post-closing documents, including non-compete and consulting forms

Contact us for a free business review today.

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