Frequently Asked Questions
How can I get a handle on the current value of my business?
We provide every qualified business owner with a customized business portfolio including a clear snapshot of your current estimated financials and projections. We believe that understanding your business value at every stage of your business life-cycle will help you make a more informed decision about selling your business when the time is right for you.
What are some inexpensive ways to establish a stronger value to my operation?
We rely heavily on innovative cross-media marketing. It is surprising how much leverage a company can get by creating better ways to connect with their customers. It’s simple and surprisingly affordable (in some cases our marketing is provided absolutely free through rebates). Our marketing plans are in place to help local small to middle-market businesses build rapid growth in revenue. Our consultations for marketing or selling your business are always complimentary..
Is my business sellable even if I don't own any commercial real estate?
Of course! Quite a few business owners make the mistake of turning to a realtor when looking to sell their operation. It’s important to understand that there is so much more on the table than only the value of real property. You have spent years building a successful business model, and deserve the rewards in getting the most out of your years of dedication.
When is the best time to consider selling my operation
When the time is right for you! Most business brokers will tell you to list your business as soon as possible even if you are only entertaining the idea. It helps to align yourself with a broker that will have your best interest at heart. We work with business owners on expanding their business for two reasons. – A.) To build strong business relationships by helping position your company for higher revenue. – B.) It puts you in the hands of someone you have trusted with more than simply selling your business at a time when you may least expect the need to sell. Selling your business should be your greatest sales accomplishment.
Why is confidentiality so important? (From our friends at BizBuySell)
Some businesses, such as historic landmarks or famous establishments, can actually benefit from publicly announcing they’re for sale. Yet, for most businesses, maintaining confidentiality can be extremely important in the business sale process. It’s important for reaching your exit goals and for the success of your business post-sale. If word gets out to your creditors, customers, competitors or employees, this could trigger a negative reaction, weakening your business momentum and therefore its value. Moreover, prospective buyers may become hesitant about purchasing your business if they feel sensitive information has been shared with others. Once you start marketing your business for sale, confidentiality can be tricky, but less so if you are working with a business broker. Business brokers are experienced at fielding inquiries from would-be buyers and reaching out to prospects without ever mentioning you or your company name. Yet, if you’re selling your business on your own, there are several steps you can take to ensure the sale of your business doesn’t leak out prematurely.
Here are 7 steps you can take to ensure confidentiality when selling your business:
* Prepare a Non-Disclosure Agreement (NDA) in advance. Have this ready for presentation to qualified buyers. You can usually find sample agreements online or work with your attorney to formulate your own. Don’t provide any details or specific information that could identify your business prior to the buyer prospect signing this agreement. It’s important to include a clause that ensures confidentiality from both parties, plus an expiration date on the agreement. – * Use blind ads when advertising your business. Do not share your personal contact information or business name when you advertise your business for sale. You can reveal this information after obtaining their confidentiality commitments. A blind ad will lead with a headline that promotes the strength of the business, instead of its name. * Create a separate email account with a non-business email address to disguise yourself with all buyer inquiries. For example, set up an email account called restaurant4saleLA@youremail.com. * When placing the ad in traditional print media, use a media-provided P.O. Box. * When using online business-for-sale sites, use the site’s identity-protecting features. * Set up a phone number that is not connected to you or your business in any way. You don’t want prospective buyers contacting your businesses and speaking to employees and you don’t want your competitors seeing a phone number on the ad that they recognize. * Prequalify buyers before sharing sensitive information. Screening potential buyers protects your confidentiality as a seller. Do not hesitate to ask a prospective buyer about his or her financial and business background. Qualified buyers expect you to screen them before sharing sensitive information; they are serious shoppers and are ready to provide this information and move on to the next steps. Additionally, qualified buyers prefer information about your business remain private because they want to know that the business they are buying has taken steps to protect its trade secrets and financial information. An effective method of screening is to formulate your ad with response requirements in a way that helps unqualified buyers opt themselves out. Ask them to describe their purchase intentions and qualifications. Prior to talking with potential buyers, prepare a form to record information about them, as well as a short script to help you answer their questions without divulging the identity of your business. Establish rapport by setting up a fair exchange of information. Keep in mind that it’s not unusual to have at least a 50% drop-out rate after the first round of communication, since this is the beginning of the process of narrowing down the field to qualified buyers. * Prepare a selling memorandum and number the copies. Once you’ve determined if someone is a qualified buyer and they’ve signed your confidentiality agreement, provide them with a selling memorandum containing a unique identification number for tracking. A seller memorandum is a thorough overview of your business and why it’s a good purchase prospect. This is often referred to as a selling memo, a confidential description book, or an offering memorandum. In the footer of each page, add a reminder that access to the document is governed by the terms of the confidentiality agreement and that there will be legal consequences to any breach of that agreement. * Obtain a signed letter of intent. Always disclose information about your business in phases.Even with a signed confidentiality agreement, you shouldn’t share proprietary information, client lists or trade secrets about your business. First and foremost, the buyer must demonstrate their purchase ability and their intent to make an offer. * Never hold meetings at your place of business. Always meet off-site. An ideal place to meet would be at the office of your broker or a near-by location free from interruption. * Involve as few people as possible. You may require the assistance of a few key employees to assist you in assembling due diligence or a buyer may want to meet the team. Nevertheless, it’s best to limit the number of personnel involved and explain to them the downside of a confidentiality breach. As you follow these steps, remember to deliver information about your business confidentially and in phases. Start by sharing a brief description of your business in your blind ad. As you screen inquiries and filter out unqualified buyers, take all the necessary steps to ensure confidentiality as you disclose more details to serious buying prospects. Balancing questions from buyers and maintaining confidentiality can be difficult, yet, proper preparation can ensure the sales process goes smoothly.
Why should I use a broker to list my business?
Broker Definition: A professional who assists in the buying and selling of businesses . The principal value of a business broker is to act as a buffer between the buyer and the seller. A broker can say certain things to a buyer and certain things to a seller and wind up with a productive discussion. The broker can tell the owner the price is too high, relay what has to be done to make a deal–very openly and candidly–and discuss how the differences in viewpoint can be ironed out effectively. ADVERTISING If you’re in the market to buy an existing business, a broker can help you find businesses for sale that fit your parameters, including location, industry and size. The broker will typically charge you a commission of 10 percent of the purchase price, but the assistance brokers can offer, especially for first-time buyers, is often worth the cost. Brokers can offer assistance in several ways: Prescreening businesses for you. Good brokers turn down many of the businesses they’re asked to sell, either because the seller won’t provide full financial disclosure or because the business is overpriced. Going through a broker helps you avoid these bad risks. Helping you pinpoint your interests. A good broker starts by finding out about your skills and interests, then helps you select the right business for you. With the help of a broker, you may discover that an industry you had never considered is the ideal one for you. Negotiating. During the negotiating process is when brokers really earn their keep. They help both parties stay focused on the ultimate goal and smooth over problems. Assisting with paperwork. Brokers know the latest laws and regulations affecting everything from licenses and permits to financing and escrow. They also know the most efficient ways to cut through red tape, which can slash months off the purchase process. Working with a broker reduces the risk that you’ll neglect some crucial form, fee or step in the process. When it comes to selling your business, finding the right buyer can be time-consuming and daunting if you try to do it yourself. A seasoned business broker can read the market, knows who’s buying what and who’s got resources, and can weed out the so-called “tire kickers” from serious buyers with sufficient financial resources who are well-suited to run a business like yours. They will also ensure that news of the sale remains confidential, that loyal customers, staff, vendors and suppliers find out only when you’re ready to let them know. Then there are administrative issues. An experienced business broker knows what paperwork to file, and when. They also coordinate efforts between lawyers, CPAs, bankers, insurance agents and others. While it costs money to contract with a broker to sell your business, think of the commission you’d pay him or her as a kind of insurance. Your broker will protect your investment in the business by placing the proper value on your business, finding the right buyer, getting you the best price possible, protecting the confidentiality of the sale, handling all negotiations, ensuring that all transactions are legal, and seeing that the transition to new ownership is as wrinkle-free as possible.
What are typical broker fees?
Brokers’ fees are generally 10-12 percent of the selling price of the business, depending on negotiations with the broker, state laws and other factors. This is usually money well spent, because the broker can usually get more money for the business, make negotiations run smoothly, handle a lot of clerical and other details, and make a sale possible, whereas an individual business seller might not be able to accomplish all these things. One of the key functions of a business broker is to act as a cushion between the buyer and the seller and negotiate the details of the deal at a time when emotions can, and do, run high. A small business is often one of the biggest assets a business owner has, one which he or she has spent considerable time and money building. An experienced broker knows how to price a business and can toot the business’s horn in a way you might not be able to. The buyer can ask the broker pointed questions that might be difficult to ask you directly and get the answers he or she needs. The broker can also help answer any questions or resolve any problems that develop during the course of the sale. When it comes to choosing a business broker, make sure there’s good chemistry between you and your broker and that the two of you communicate well. You’re paying your broker to look out for your interests, negotiate successfully on your behalf, and complete the transaction in a timely and professional manner.