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How much is my business worth?
Establishing the value of your business is critical to achieving a sale. Our experienced team of business brokers know that pricing a business too high or too low can have a detrimental effect on the sale of the business. It is important to price the business correctly from the start.
The market ultimately decides the final selling price of a business. However, a respectable business brokerage such as ours can provide you with an objective and fair market valuation of your business in a price range that will sell. We have the capability and experience to perform a fair market valuation for almost any type of business.
We do this at no charge and without obligation to use our services.
What can I do to help sell my business?
Although national statistics show that only 20% of all businesses for sale in the United States actually sell, we are confident we can sell your business if you follow our strategies and recommendations. It is imperative that you be an active participant in the process and work closely with us.
A buyer will want up-to-date financial information. If you use an accountant, you can work with them on making current information available. If you are using an attorney, make sure they are familiar with the business closing process and the laws of the state of Florida. You might also ask if their schedule will allow them to participate in the closing on very short notice. If you and the buyer want to close the sale quickly, usually within a few weeks unless there is an alcohol or other license involved that might delay things, you don’t want to wait until the attorney can make the time to prepare the documents or attend the closing. Time is of the essence in any business sale transaction. The failure to close on schedule permits the buyer to reconsider or make changes to the proposal.
It would also be of benefit to the sale of the business if you:
Follow the pricing and offering terms recommended by our team
Follow the strategies they outline
Keep the overall appearance of your business neat, clean, and organized (paint etc. if needed)
Replace or repair broken furniture, fixtures, and equipment
Take some time to understand the entire business sales process upfront
Disclose to us and any prospective buyers the pros and cons of your business
Continue running your business to the best of your ability until the day ownership is transferred
Can I put the business up for sale without employees, vendors, customers, & competition knowing?
We fully understand that one of the most important aspects of selling a business is keeping the sale confidential. All front-end and back-end marketing will be done in such a way that your employees, vendors, suppliers, and competition will be unaware that your business is for sale, right up to the point that you decide to inform them.
Our diligent team of business brokers put a great deal of effort into pre-screening prospective buyers in terms of financial capability, experience, and motivation. As part of this process any potential buyers are required to sign a confidentiality agreement before specific information about the business is disclosed.
What can business brokers do, and what can they not do?
Business brokers are the professionals who will facilitate the successful sale of your business. It is important that you understand just what a professional business broker can do — as well as what they can’t. They can help you decide how to price your business and how to structure the sale so it makes sense for everyone — you and the buyer. They can handle the marketing/advertising, pre-screen buyers, find the right buyer and then work with you and them in negotiating and preparing the contract, as well as assisting in every other step of the way until the transaction is successfully closed. They can also help the buyer in all the details of the business buying process.
A business broker is not, however, a magician who can sell an overpriced business. Most businesses are sale-able if priced properly. You should understand that only the marketplace can determine what a business will sell for.
The amount of the down payment you are willing to accept, along with the terms of the seller financing can greatly influence not only the ultimate selling price, but also the success of the sale itself.
Why do so many deals fall apart once they are under contract?
A high number of deals fall apart because of poor planning. From the beginning, prior to presenting your business to potential buyers, we will work with you to strategize the sale of your business to ensure a successful outcome.
Are there other forms of financing available to buyers?
There are several other financing options available to buyers, including conventional and Small Business Administration loans. Sometimes, however, lenders require that seller's financing be part of the transaction. We will help to explain the various options to you and explore the possible outcomes of each.
What happens if I own the property my business is in?
If you own the real estate that the business is in you have several options.
Firstly, you have the option to sell both the real estate and business to the buyer, which is sometimes beneficial to the buyer in terms of bank financing. Secondly, you can sell only your business and then lease the premises to the buyer.
In addition, there are several hybrid options which we can discuss with you.
What happens if I have unreported cash?
If you are not reporting all your income for tax purposes, we recommended that you start doing so immediately!
A prospective buyer will want you to prove that your business is doing what you state, so unreported income can be very detrimental. It will reduce the amount you will receive for your business, which will in all likelihood take longer to sell, and can greatly limit financing options.
It will also significantly increase the chance that you may not be able to sell the business at all.
How long will it take to sell my business?
It generally takes, on average, between five to eight months to sell most businesses. Keep in mind that an average is just that and some businesses will take longer to sell, while others will sell in a shorter period of time. More often than not, larger businesses take longer to sell.
The sooner you have all the information needed to begin the marketing process, the shorter the time period should be. It is also important that the business be priced properly from the start. Some sellers, operating under the premise that they can always come down in price, overprice their business. This theory can backfire because buyers often will refuse to look at an overpriced business.
It has been shown that the amount of the down payment may be the key ingredient to a quick sale. The lower the down payment (generally 40 percent of the asking price or less) the shorter the time to a successful sale. A reasonable down payment also tells a potential buyer that the seller has faith in the business’s ability to make the payments.
If your circumstances dictate that you need to sell your business quickly, our team of experienced brokers can help to position your business with a special price and terms that will shorten the sale time frame.
What are buyers looking for in a business?
When assessing a business, most buyers will want to see a sustainable company that has a customer/client base with a cash flow that they can build upon to grow the business. One of the major considerations, as might be expected, is whether the present owner can prove that the business is actually making the sales the seller claims.
Buyers look for businesses that are priced comparably. They typically look at several, and consequently are aware of overpricing. Businesses that tend to fare the best on the market and can command prices at the high end of the range for comparable businesses are those that have been operating for at least 7 years, have favorable lease terms, and are doing better in the current year than in the previous one.
In addition, it is of benefit if the owner works a maximum of 45 hours per week, files an accurate tax return, and offers seller financing. While considering all of these things, we will work with you to position your business in a manner that will be most appealing to potential buyers.
Why should I use a business broker, why not try to sell the business myself?
From our research, we estimate that 19 out of 20 buyers are either not serious or not qualified, and national statistics indicate that only 20% of all businesses for sale actually sell.
Consequently, we feel that it is imperative that a knowledgeable professional guide you through the process. With our experience and strategic approach, we can obtain better terms and a better price than achieved by business owners who try to make a sale themselves.
What happens when there is a buyer for my business?
When a buyer is sufficiently interested in your business, they will (or should) submit an offer in writing. This offer may have one or more contingencies. Usually, the contingencies concern a detailed review of your financial records and may also include a review of your lease arrangements, franchise agreement, or other pertinent details of the business.
You may accept the terms of the offer or you may make a counter-proposal. You should understand, however, that if you do not accept the buyer’s proposal the buyer can withdraw it at any time. At first review, you may not be pleased with a particular offer however it is important to look at it carefully. It may be lacking in some areas, but it might also have some pluses to seriously consider.
Once you and the buyer are in agreement, both of you should work to satisfy and remove the contingencies in the offer. It is important that you cooperate fully in this process. You don’t want the buyer to think that you are hiding anything. The buyer may, at this point, bring in outside advisers to help them review the information. When all the conditions have been met, final papers will be drawn and signed. Once the closing has been completed, money will be distributed and the new owner will take possession of the business.
Why is considering seller financing so important to the sale of my business?
Surveys have shown that a seller who asks for all cash, receives on average only 70 percent of his or her asking price, while sellers who accept terms receive on average 86 percent of their asking price. That’s a difference of 16 percent! In many cases, businesses that are listed for all cash just don’t sell. With reasonable terms, however, the chances of selling increase dramatically and the time period from listing to sale greatly decreases.
Most sellers are unaware of how much interest they can receive by financing the sale of their business. In some cases, it can greatly increase the amount received. And, again, it tells the buyer that the seller has enough confidence that the business can indeed pay for itself.
You may also want to consult with your CPA since there could be tax benefits to you for carrying an owner’s note.
How does it work if there is a lease involved?
If the sale involves the lease of a property then in some cases the seller’s lease is assigned to the buyer with the landlord’s approval and sometimes the seller is released from the lease, with a new one being executed at closing.
Occasionally a seller needs to remain on the lease as a guarantor. The terms of your lease will probably state what will be required in the event that you sell your business and we can help you to review this.
After a purchase contract has been executed, we will work closely with your landlord/property management company concerning the transfer of the lease.
What typically gets transferred in the sale and what does not?
Typically, the asking price of the business includes all of the furniture, fixtures, equipment, inventory, and goodwill.
All loans are paid off at the time of closing so that the assets are conveyed to a buyer free and clear. Money in bank accounts, deposits, and the accounts payable are usually not included in the asking price. Accounts receivables are also usually not included, although in some circumstances this might be necessary to meet the criteria of a financier.
Do I need an attorney or an accountant to sell the business?
Many small business owners decide not to utilize the services of an attorney or CPA, preferring instead to ‘go it alone’ in an effort to save costs. However, we suggest that you do work with your attorney and CPA to ensure that the transaction is as you understand it as this helps to mitigate any potential risks.
How do I make an effective exit for my business?
Finding the right time to sell your business is usually the toughest challenge in this competitive world.
It helps to sell your business if you have a strong reason for choosing to exit. Profits and losses are major reasons that one starts thinking about selling a business. High profits made from selling or not getting enough return income from the business can force an owner to make hard decisions.
Also, you should make sure that you have some sort of future plan for your next step in life. Whether you are looking to enter into another business or considering retirement, every step must be planned, and you need to look for the best business evaluation so that you fully understand the fair market value.
How are we compensated?
We will be compensated only when your business sells. If for some reason we don’t sell your business within the agreed upon time frame, we will not get compensated. National statistics demonstrate that only 20% of all businesses for sale in the United States actually sell each year.
Whilst this may seem to be a low number do not be discouraged. We are confident that there is a high probability we can sell your business if you follow our recommendations and strategies.
If you have any questions that are not covered in this section then call us on 407-908-4663 or email email@example.com and we would be more than happy to help.
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