CHALLENGES
If you are a business owner who is thinking about selling your business, your focus is to make sure you maintain your revenue level until such time when you can give the keys to the new owner. This is not the time to be out of focus. No one can do a better job than you in running your own business. Whether you are an owner of a restaurant, grocery store, insurance agency, law practice, chiropractor’s office – your expertise is most likely not in the area of buying/selling businesses therefore consider allowing experts to handle such tasks so that you can continue to focus on generating consistent revenue and not allow the selling process get in the way of managing your business. It’s important for the owner/seller to remain vigilant and not be complacent when going through the sales process as deals may fall through for whatever reason.
Business owners/sellers should have exit strategy and succession plans developed way in advance prior to selling so they can utilize available tax and financial strategies that will minimize taxes at the time of the sale. If the business is anything but corporate structure, what will happen if one of the partner/member/shareholder of an LLP/LLC/S-Corp passed away prematurely or he/she become disabled? Most business owners don’t plan for these events as they are focus in managing and growing their business. Unfortunately, not having a plan can result to surviving partners suing the family of the deceased/disabled partner, or vice versa.
Business owners/sellers have an established relationship with their trusted partners who knows their business, their entity structure, their company and owner’s goals. Their trusted partners are their CPA’s, Attorney’s and Financial Advisors. Unfortunately, these trusted partners are not the experts in business valuation.
VALUE ADDED
The following describes how a Business Broker can add value to the owner/seller. A Business Broker understands the market, has access to information regarding recent sales, and can apply various strategies to guide sellers on the most probable selling price. A Business Broker maintains confidentiality and identifies the business only to prospective buyers who qualify. A Business Broker advises on preparing the business for sale and can also undertake a marketing program to give maximum exposure. A Business Broker is a vital advisor to the seller at any stage of the sale transaction. A Business Broker is knowledgeable on negotiating price, terms, and other key aspects of the sale. A Business Broker is trained in the legislation and documentation necessary to protect the parties involved. A Business Broker has a role that the owner/seller cannot do effectively.
PROCESS
Below are the step by step process of selling a business:
- Pre-listing appointment. Business Broker meets with the owner/seller
- Business Broker analyze financials and tax returns
- Listing appointment. Business Broker presents the business valuation to owner/seller
- Business Broker prepares a draft listing and presents to owner/seller for review
- Business Broker post listing on MLS and utilize various marketing strategies.
- Business Broker qualifies prospective buyers
- Business Broker sets up meeting between seller and prospective buyer
- Business Broker sets up a second meeting with seller and prospective buyer to answer additional questions.
- Business Broker prepares Asset Purchase contract
- Owner/Seller accept or counteroffer, and sets closing date
- Due diligence process begins
- Buyer signs off, or walks away with deposit returned
- Owner/Seller’s attorney prepares closing documents
- Closing day
SUMMARY
Going back to the question: When to use Business Broker when selling a business? Ideally, establishing a relationship with a Business Broker should happen way before owner wants to sell so proper planning can be established. In this article, I addressed some of the challenges that owners may face when planning to sell their business, how they may not be able to rely on their trusted partners, how Business Brokers can ease the challenges identified, and the right time to retain a Business Broker in the process.
For more information on selling your business, please contact Central Florida Business Brokerage today!
