Selling a business is a much more complicated, tricky, and involving affair than selling a real estate. Some important steps are required but it is often highly recommended to use the services of a business brokers who might be equipped with the proper and specific sets of skills to getting fair value. The function of the broker during the sale is to facilitate buying and act as a go-between for the buyer and the seller.
As a summary of steps that are required, begin by listing the business that is on sale with the brokerage company. The broker should be from a reputable and well known firm to avoid mischief, fraud, or avoidable losses. They should be met and talked to about the sales process well in advance. This not only assists them in selling the business but also helps them to have it sold at the best price possible. It is recommended to list the business with a broker because when one wants to sell it confidentially. This is a wise step since one can use the resources of a professional intermediary to guide them throughout the selling process.
The second step should be determining the selling price. The very first thing potential buyers will require to know about a business is the price so that they can gauge and find out if they will purchase or even compare to other similar businesses that are on sale. The issue of pricing is one that a broker can easily assist with assuming that they have prices of other similar businesses and can make rough estimates on the costs.
For larger or more complicated businesses, get the services of a professional business evaluator who would be more accurate in determining the selling price. The cost is determined by some factors such as what is actually being sold such as assets, shares, and the work that is or was in progress before the decision for the sale was made so that it is transitioned to appropriate price, inventory, and accounts receivable. These minor and major details should be discussed with the chosen broker and the personal accountant. The process of determining the selling price of the business is an important step of the process.
The other critical thing would be the business information profile where buyers should be presented with a brief snapshot of what the business is all about. The description should be put in a way to leave the prospective buyers with the urge to know more. A good broker should come up with a brief and strong description of the business which should work as a selling point for the business as well. It should also give a brief financial statement indicating performance.
The broker should then qualify the potential business buyers who might have shown interest by responding. The buyer would then hold a conversation with the broker where the brokers have got to find important information such as the buyer’s objectives and what they are looking for. The broker’s responsibility at this stage is to qualify the buyers or fine tune the list according to their financial abilities, aptitude for the business, “seriousness” and other factors. The appropriate and potential buyers are then invited for the signing of a non-disclosure agreement, where the buyer is now presented with further information with regards to the premises. This would include information about the operations of the business, number of employees, a brief summary of the financial performance and any other pertinent “general” information about the business. The general description of the business is set under strict non-disclosure rules to help ensure confidentiality of the sale but at the same time help the potential buyer on deciding if they would want to take their interest to the next level.
The buyer is then shown the business. The business must be in line with any photographs that may have been supplied earlier. The experts recommend preparation at this point ought to be honesty. Presentation is one of the major steps on the selling process. The picture portrayed on its financial matters must be very accurate. It is quite clear to any risk-taker that any business will have some speed bumps and it is very important for them to know any that may be existence for the business. A good broker should remember that this is a precious time to showcase the business potentials and therefore they ought to emphasize on the strength and the hard work that has been done to make it a success other than dwell on its weaknesses. One should expect a lot of questions at this point from the buyer and the best procedure should be trying to answer everything. This is a point where potential buyers will make conditional offer to satisfy themselves through the due diligence process.
A good broker should be in a position to accept or make offers. Majority of these business offers are conditional offers concerning many different issues. During this process, one should confirm some of the facts such as assuring the buyer of getting financing, assuming leases successfully or obtaining franchise approval. In line with specialists, “A condition offer is usually made with a refundable deposit’, this is for the reason that when the deal does not go through, then the risk is partially if not fully catered for.
The conditional offer phase allows the potential buyers to conduct their due diligence were they confirm facts, go through the financial statements, or records and review the overall business operations carefully.
When the buyer is fully satisfied that everything is ok, they waive any other conditions and close the transaction by signing documents through respective lawyers and exchanging the agreed amount.