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Questions Business Owners Ask When Selling Their Business

Questions Business Owners Ask When Selling Their Business By Paul L. Kush – Copyright © 1994 Solutions Consultants Business Brokers Frequently Asked Questions WHY SHOULD I CONTRACT A BUSINESS BROKER? Business Brokers understand the market and the quickest path to achieving a closed transaction. SO YOU CAN STAY FOCUSED ON RUNNING YOUR BUSINESS - This is important so your business stays profitable and marketable. Having a third party involved allows you to keep an arm’s length in the negotiations. MARKETING AND ADVERTISING Designing a marketing plan specifically targeted to the types of buyer that would be interested in the business is a key factor. Business brokers use data bases of buyer prospects professional associations, and investment groups.

Target marketing through trade publications, direct mail, and Internet sites specifically for business transactions may be used to reach buyers. Advertising in newspapers both local and national are typically used. QUALIFYING BUYERS The business broker will focus on those prospects who are financially qualified and who are genuinely interested in the type of business. PRESENTING THE BUSINESS The professional business broker is experienced in handling negotiations. The broker also offers the seller convenience of continuing to manage the business while the selling process is underway.

MAINTAINING PRIVACY AND CONFIDENTIALITY Business owners are extremely concerned about confidentiality. A professional broker is skilled at protecting the confidentiality from the employees, suppliers, creditors, and customers of the business. NEGOTIATING THE BUSINESS SALE TRANSACTION The business broker will be a vital advisor during the sale transaction. Knowledgeable about negotiating price, terms, and other key aspects of the sale, the broker will guide the seller each step of the way. Proper deal structure will greatly affect the net amount that the seller will end up keeping after selling the business. HOW MUCH IS MY BUSINESS WORTH? The value of your company depends on many factors such as: Who is buying the business, what is the cash flow, asset values, financial history, condition of equipment and premises of the business. Are there favorable lease terms, what is the competition, location and the economy? As you can see analyzing your business and comparable sales in your industry is imperative. Solutions Consultants Business Brokers can advise you on the proper pricing strategy for your business based on all of these factors. The biggest mistake you can make is to over or under price your business! It is Imperative to do a third party valuation. Not only for you to know the true market value of your business so you can price it right, but most financial institutions insist on a business valuation before they will consider financing.

In addition, businesses that have third party valuations sell more frequently at the asking price than those that don't have one. It provides the buyer with the confidence that the business has been analyzed and priced. Why not sell my business myself? It is extremely difficult to maintain your business while engaging in the selling process. Most owners do not know the time and expense involved in marketing their own business. They will often spend wasted hours working with unqualified buyers. In fact, because the business owner does not have access to a network of qualified buyers, they often end up selling their businesses for much less than they could have. It is very hard to maintain confidentiality as well as negotiate a deal if the business owner is working directly with the buyer. Using a Broker can ensure the highest dollar. WHEN IS THE BEST TIME TO SELL? The best time to sell is at the businesses peak. Buyers put most of their focus on the future prospects, if your business has been a steady performer and they can see growth potential, the higher the purchase price.

WHY SHOULD I USE SOLUTIONS CONSULTANTS BUSINESS BROKERS AND THE SCBB TO SELL MY BUSINESS? Solutions Consultants Business Brokers will help you get the best value for your business. We will save both buyers and Sellers money by avoiding costly mistakes in the selling process. Our National Affiliation with the SCBB network enables us to utilize our affiliate offices worldwide to aid in selling our listings. Solutions Consultants Business Brokers will help you get the best value for your business. We will save both buyers and Sellers money by avoiding costly mistakes in the selling process. * Bottom Line, by using us to sell your business you get: * Maximum Exposure * Confidentiality * Qualified Buyers * Advertising and Marketing * Financial Guidance * Negotiating Power * Ability co-broker with our affiliates * Experience Proven Results WHAT ITEMS DO I NEED TO PREPARE IN ORDER TO SELL MY BUSINESS? * Gather Documents for Evaluation: * Three Years of Income Statements or Tax Returns * Current Balance Sheet * Current Asset List with replacement value * Copy of Facilities Lease Agreement * Organizational chart We assist you in putting together a professional marketing package. A professional business broker is never the expert in your business or the industry. That expertise comes from the business owner. The broker is the marketing expert. Preparing a marketing package for your business requires that the owner and the broker work together to determine the strengths and weaknesses of a company and how they could impact the marketing of your business.

WHEN SHOULD I DEVELOP AN EXIT STRATEGY? The sooner the better. The ideal time to develop an Exit Strategy for your business is when you start or purchase the business. However, industry statistics indicate that 85% of all business owners do not have a defined exit strategy although, on average 75% of their net worth is tied up in their business. IS MY COMPANY READY FOR SALE? The company's financial records and operations must be evaluated and analyzed to determine the strengths and weaknesses of the company. Proper planning will help you address and hopefully minimize any operational or financial weaknesses of the company before launching the marketing phase of the disposition process. WHAT IS MY COMPANY WORTH? The market price range of your company is estimated after consulting with all of your team members (accountant, valuation expert, M&A specialist) and evaluating all of your goals and objectives. Timing considerations, proposed transaction structure, industry conditions and lending market conditions are all key elements to consider in estimating the market price range for your company. HOW LONG WILL IT TAKE TO SELL MY COMPANY? The industry average for selling a business is 6-12 months. The size of the transaction, the pricing structure, and specific marketing strategy will directly affect how long it will take to sell your company.


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