Hello, on behalf of Florida Business Exchange, welcome to ‘Selling Your Business…What you should know’. This is one in a series of videos from Florida Business Exchange that cover the basic steps you will encounter in selling your business. You have devoted your time, money, and energy into building, running, and operating your business. It may well represent your life’s work. Selling your business is a major decision! Thank you for your interest in working with Florida Business Exchange.
Now, back to What You Should know. What Can business brokers DO and what Can’t They do for you? Business brokers are the professionals who will facilitate the successful sale of your business.
Help you decide the right price your business and how to structure the sale to make sense for both seller and buyer.
Market your business, find the right buyer for your business, and work with you and the buyer every step of the way until the transaction is closed.
Restructure or Re-price the transaction during the marketing phase to adjust to changing markets.
Be a magician and sell overpriced businesses
Control the marketplace, and determine the price. Only buyers will give you an offer.
Change the amount of money a buyer has to put down.
Determine the amount of money a bank will loan on your business, or how much Owner Financing will be required.
They Can However:
Help you structure your transaction with terms to maximize your selling price, and increase the odds of a sale.
Many sellers are curious as to how long it will take to sell their business.
An aggressively priced business in a coveted industry may take 3 to 4 months to sell, others may take longer. Whereas an overpriced business may never sell. Keep in mind that an average is just that. Some businesses will take longer, while others sell quickly. The sooner we 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 right from the start. Some sellers, operating under the premise that they can always come down in price, overprice their business. This theory often “backfires,” because buyers often will refuse to even consider an overpriced business.
It has been shown that the amount of the down payment is often a key ingredient to a quick sale. The lower the down payment, generally 40 percent of the asking price or less, the shorter the time for a successful sale. A reasonable down payment also tells a potential buyer that the seller has confidence in the ability of the business to generate the cash flow necessary to make the loan payments.
Surveys have shown that a seller, who asks for all cash, receives on average only 70 percent of their 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 helps spread out Capital Gains taxes over several years. And, again, it tells the buyer that the seller has enough confidence that the business can, indeed, pay for itself.
When a buyer is sufficiently interested in your business, we will help in the preparation of an offer or proposal. This offer or proposal may have one or more contingencies. Usually, they concern a detailed review of your financial records and may also include a review of your lease arrangements, license requirements or other pertinent details of the business. The buyer’s proposal will be presented to you for your consideration. You may accept the terms of the offer or you may make a counter-proposal. You should understand, however, that if you do counter the buyer’s proposal, the original offer is dead.
When you and the buyer are in agreement, we will work with both of you to satisfy and remove any 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 his point, bring in outside advisors 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. As your business broker professional, we will work with you throughout the entire sales process.
You can cooperate fully with us and any other professionals that you are using. A buyer will want up-to-date financial information. If you use an accountant or bookkeeping firm, you can work with them on making current information available. If you are using an attorney, make sure he or she is familiar with the business closing process and the laws of your particular state.
Remember: Time is of the essence on any business sale transaction. Return requests for information quickly. We do not want to give the buyer an opportunity to change their mind.
Again. On behalf of Florida Business Exchange, thank you for listening. If you have any questions regarding preparing your business for sale, please do not hesitate to contact your Florida Business Exchange intermediary for a complimentary consultation. I wish you the best of luck in pursuing your after sale dreams, and having our team of professionals helping you through the process.