Selling Your Business: Why Won’t it Sell?

selling your businessOnce you have made the decision to sell, what are your odds on actually selling your business? Well, research shows that your annual sales dictate how well or not well that your business will sell. If your annual sales are $750,000 or less, your odds on selling your business are only 18%. If your annual sales are $750,000-$2 million, your odds increase to 25%. If your annual sales volume is above $2 million, the odds increase to 30%+. Another thing to keep in mind though is the approximately 75% of all businesses have annual sales of less than $750,000.

So what do all these stats mean? To put it sharply: if you are thinking of selling your business, you have about a one in five chance of it actually selling. The next obvious question raised is why are these odds so low? One would think that if you put your business on the market, it should sell in a reasonable length of time. Here are some reasons why businesses didn’t sell, as explained by various business brokers and intermediaries. They are excerpted from an article in INC magazine, April 2002.

  • The business is no longer listed for sale. The cash flow was strong, but a lot of buyers thought that the deal was overpriced.
  • There was serious interest, but the owner got distracted by an arrangement with a friend to solicit offers. None came through.
  • Buyers were intrigued, but the economics of the deal wouldn’t make sense, and the seller wouldn’t negotiate.
  • We had three offers, including an accepted bid for $4 million, but the buyer couldn’t get financing.
  • We almost had the deal, but financing was impossible to find.
  • The deal dragged on for months but fell apart for lack of financing. . .

They say that timing is everything. Many business owners wait until the economy is down  Their own business is also paying the price for the slowdown, so they elect to sell. Now they discover that the price they thought they could get for their business is is not realistic in today’s market. Sellers should keep in mind that the best time to sell is when their business is doing well.

One factor that emerges from the comments by intermediaries above is the lack of financing. This would seem to indicate that the sellers wanted all cash, or, at least, a good portion of the selling price was in cash. Three of the comments stated that the reason the deal didn’t go through was that “financing was impossible to find”,
the buyer couldn’t get financing”, and “…fell apart for lack of financing.” The reasons that obtaining financing is so difficult are (1) the business doesn’t qualify for financing, (2) the buyer doesn’t qualify for financing. and, most importantly  most small businesses are not financeable. Banks are generally not interested; the Small Business Administration (SBA), although certainly an option, only comes through in less than 10% of deals. If lenders are not interested in financing the sale of the business, there are only two choices: the buyer pays all cash or the seller finances the sale.

 

Tips for a Fast Sale!

  • Prepare a current list of fixtures and equipment
  • Have up-to-date financial information available
  • Gather all of the information a buyer might like to review
  • Maintain normal business hours
  • Spiff up the business
  • Set a realistic price
  • Be willing to negotiate

 

Want your business to be one in the five that sells? Here are two major ways to increase your odds of selling your business:

  • Make sure that you are serious before yo put your business up for sale (see our article: Are You Ready to Sell Your Business? for more on that). You should be willing to accept, within reason, what the marketplace is willing to pay. It’s not what you want for your business, or what your accountant says it’s worth–it’s what a buyer is willing to pay. Find out if the price you are asking is in the “ballpark’ before you go to the market. Your local business brokerage professional is a good place to start. He or she can tell you what similar businesses have sold for and what you might expect to receive if you sell now.
  • Be willing to finance the sale of your business. Counting on the businesses selling for all cash or assuming that the business can be financed will most likely make your business one of the four that don’t sell. By showing your willingness to assist in the financing, you reassure the buyer that you have confidence in the businesses’ ability to finance itself. Also, keep in mind that by financing the business you will be entitled to interest on the balance, thereby increasing the price you will receive by selling your business.

Following these guidelines and tips might not sell your business, but it will certainly increase the odds of selling your business. Almost any business will sell under the right circumstances. If you are serious about selling, the fist step would be to call a professional business broker. He or she can answer all of your questions about the selling process and what it takes to sell your business in today’s economic climate.

 

The Perfect Business

The perfect business, the one that would be sure to sell, has the following attributes:

  • A compelling reason to sell
  • A desired or popular industry type
  • An attractive and strategic location (if important for the business type)
  • A reasonable price
  • A reasonable down payment (hopefully 40% of the full price or less)
  • Seller financing
  • Reasonable sales (hopefully increasing each year)
  • Seller earnings of $60,000 or more

 

There is an old adage that goes something like this:

“The worst day of working for yourself is better than the best day of working for someone else.”

Finance a New Business

Finance a New BusinessThe epidemic of corporate downsizing in the US has made owning a business a more attractive proposition than ever before. As increasing numbers of prospective buyers embark on the process of becoming independent business owners, many of them voice a common concern: how do I finance a new business?

Prospective buyers are aware that the credit crunch prevents the traditional lending institution from being the likely solution to their needs. Where then can buyers turn for help to finance a new business, which is likely to be the largest single investment of their lives? There are a variety of financing sources, and buyers will find one that fills their particular requirements. (Small businesses–those priced under $100,000-$150,000–will usually depend on seller financing as the chief source.) For many businesses, here are the best routes to follow:

 

Buyer’s Personal Equity

In most business acquisition situations, this is the place to begin. Typically, anywhere from 20-50% of cash needed to purchase a business comes from the buyer and his or her family. Buyers should decide how much capital they are able to risk, and the actual amount will vary, of course, depending on the specific business and the terms of the sale. But, on average, a buyer should be prepared to come up with something between $50,000-$150,000 for the purchase of a small business.

The dream of buying a business by means of a highly-leveraged transaction (one requiring minimum cash) must remain a dream and not a reality from most buyers. The exceptions are those buyers who have special talents or skills sought after by investors, those whose business will directly benefit jobs that are of local public interest, or those whose businesses are expected to make unusually large profits.

One of the major reasons personal equity financing is a good starting point is that buyers who invest their own capital to start the ball rolling–they are positively influencing other possible investors or lenders to participate.

 

Seller Financing

One of the simplest–and best–ways to finance a new business is to work hand-in-hand with the seller. The seller’s willingness to participate will be influenced by his or her own requirements: tax considerations as well as cash needs.

In some instances, sellers are virtually forced to finance the sale of their own business in order to keep the deal from falling through. Many sellers, however, actively prefer to do the financing themselves. Doing so not only can increase the chances for a successful sale, but can also be helpful in obtaining the best possible price.

The terms offered by sellers are usually more flexible and more agreeable to the buyer than those offered from a third-party lender. Sellers will typically finance 50-60% or more of the selling price, with an interest rate below current bank rates and with a far longer amortization.  The terms will usually have scheduled payments similar to conventional loans.

As with buyer-equity financing, seller financing can make the business more attractive and viable to other lenders. In fact, sometimes outside lenders will usually have scheduled payments similar to conventional loans. Furthermore, sometimes outside lenders will refuse to participate unless a large chunk of seller financing is already in place.

 

Venture Capital

Venture capitalists have become more eager players in the financing of large independent businesses. Previously known for going after the high-risk, high-profile band-new business, they are becoming increasingly interested in established, existing entities.

This is not to say that outside equity investors are lining up outside the buyer’s door, especially if the buyer in counting on a single investor to take on this kind of risk. Professional venture capitalists will be less daunted by risk; however, they will likely want majority control and will expect to make at least 30% annual rate of return on their investment to finance a new business.

 

Small Business Administration

Thanks to the US Small Business Administration Loan Guarantee Program, favorable financing terms are available to business buyers. Similar to the terms of typical seller financing, SBA loans have long amortization periods (ten years), and up to 70% financing (more than usually available with the seller-financed sale).

SBA loans are not, however, a given. The buyer seeking the loan to finance a new business must prove stability of the business and must also be prepared to offer collateral–machinery, equipment, or real-estate. In addition, there must be evidence of a healthy cash flow in order to unsure that loan payments can be made. In cases where there is adequate cash flow but insufficient collateral, the buyer may have to offer personal collateral, such as his or her house or other property.

Over the years, the SBA has become more in tune with small business financing. It now has a program for loans under $150,000 that requires only a minimum or paperwork and information. Another optimistic financing sign: more banks and lending institutions are now being approves as SBA lenders to finance a new business.

 

Lending Institutions

Banks and other lending agencies provide “unsecured” loans to commensurate with the cash available for servicing the debt. (“Unsecured” is a misnomer, because banks and other lenders of this type will aim to secure their loans of the collateral exists.) Those seeking bank loans to finance a new business will have more success if they have a large net worth liquid assets, or a reliable source of income. Unsecured loans are also easier to come by if the buyer is already a favored customer or one qualifying for the SBA loan program.

When a bank participates in financing a business sale, it will typically finance 50-75% of the real estate value, 75-90% of the new equipment value, or 50% of inventory. The only intangible assets attractive to banks are accounts receivable  which they will finance from 80-90%.

Although he terms may sounds attractive, most business buyers are unwise to look toward conventional lending institutions to finance their new business. By some estimates, the rate of rejection by banks for business acquisition loans can go higher than 80%.

 

With any of the acquisition financing options, buyers must be open to creative solutions, and they must be willing to take some risks. Whether the route finally chosen is personal, through the seller, or third-party financing, the well informed buyer can feel confident that there is a solution to that big acquisition question. Financing, in some form, does exist out there.

Buying or Selling a Business: Why Do Deals Fall Apart?

arguing businessmen selling a businessBuying or Selling a Business: Why Do Deals Fall Apart?

 

In many cases, the buyer and seller reach a tentative agreement when selling a business, only to have it all fall apart. There are some reasons this happens, and once they are understood, many of the worst deal-breakers can be avoided. Understanding is the key word. Both the buyer and seller must develop an awareness of what the sale involves–and such an awareness should include facing potential problems before they swell into the flood-waters and “sink” the sale.

Now, what keeps a sale from closing successfully? Surveyed business brokers across the United States found similar reasons that were cited so often that a pattern of causality began to emerge. A compilation of situations and factors of which affect the sale of a business are explained below.

 

The Seller Fails to Reveal Problems

If and when a seller is not up-front about any of the problems with the business, that does not mean these problems will go away when the buyer takes over. The problems are bound to show up later, usually sometimes after a tentative agreement has been reached. The buyer then gets cold feet–hardly anyone in this situation likes surprises–and the deal promptly falls apart. Event though this may seem a tall order, sellers must be as open about the negatives of their business as they are about positives. Again and again, business brokers surveyed said: “We can handle most problems…if we know about them at the start of the selling”.

 

The Buyer Has Second Thoughts About the Price

In some cases, the buyer agrees on a price, only to discover that the business will not support that price, in his or her opinion. Whether this “discovery” is based on gut reaction or a second look at the figures, it impacts seriously on the transaction at hand. The deal is in serious jeopardy when the seller wants more than the buyer feels the business is worth. It is of paramount importance that the business be fairly priced when selling a business. Once that price has been established, the documentation must support the seller’s claims so that buyers can see the “real” facts form themselves.

 

 Both the Buyer and the Seller Grow Impatient

During the process of buying or selling a business, it’s easy for either party to let impatience settle in. Buyers continue to want increasing varieties and volumes of information, and sellers grow weary of it all. Both sides need to understand that the closing process of selling a business takes time. However, it shouldn’t take so long that the deal becomes endangered. It is important that both parties should use only those knowledgeable in the business closing process if they are using outside professionals. A business broker is one of the most competent outside professionals in a given business area, and these should be given strong consideration in putting together the “team”. Seller and buyer may be inclined to use an attorney or accountant with whom they are familiar with, but these people may not have the experience to bring the sale to a successful conclusion.

 

The Buyer and the Seller are Not (Never Were) in Agreement

How does this situation arise? Unfortunately, there are business sale transactions wherein the buyer and the seller realize too late that they have not been in agreement all along–they just thought they were. Cases of miscommunication are often fatal to a successful closing. A professional business broker is skilled in making sure that both sides know exactly what the deal entails, and can reduce the chance that such misunderstandings will occur.

 

The Seller Doesn’t Really Want to Sell

In all too many instances, the seller does not really want to be selling the business. The idea had sounded so good at the start, but now that things have come down to the wire, the fire to sell has all but diminished. Therefore, it is key that prospective sellers make a firm decision to sell a business prior to going into the market with the business. If there are doubts, these ought to be quelled or resolved. Some sellers enter the marketplace just to test the waters; they want to see if they could get their “price” if they ever get really serious. This type of seller is the bane of business brokers and buyers alike. However, business brokers generally can tell when they encounter the casual (as opposed to the serious) seller. But an inexperienced buyer may not recognize the difference until it’s too late. Most business brokers will agree that a willing seller, is a good seller.

 

Or the Reverse: The Buyer Doesn’t Really Want to Sell

What’s true for the mixed-emotion seller can be flipped around and applied to the buyer as well. Full of excitement and optimism, buyers can enter the sale process but then begin to drag their feet as they draw nearer to the “altar”. This is especially true today with so many displaced corporate executives entering the market. Buying and owning a business is still the American dream–and for many it becomes a profitable reality. However, the entrepreneurial reality also includes risk, a lot of hard work, and long intense hours. Sometimes this is too much reality for a prospective buyer to handle.

 

None of the Above

The situations detailed above are the just the main reasons why deals fall apart. However, there can be problems beyond anyone’s control, such as Acts of God, unforeseen environmental problems, etc. But the good news is that many potential deal-crushers can be handled or dealt with prior to the marketing of the business, to help ensure that the sale will close successfully.

 

A Final Note

Remember these four components in working toward the success of the business sale:

  • Good chemistry between the parties involved
  • A mutual understanding of the agreement
  • A mutual understanding of the emotions of both buyer and seller
  • The belief, on the part of both buyer and seller, that they are involved in a good deal

Are You Ready to Sell Your Business?

Thinking to Sell Your Business?

If you’ve come this far, then the option to sell your business has aroused enough curiosity in you that you are taking the first step. You don’t have to make a commitment at this point; this is just you searching to be informed about the necessities of successfully selling your business. This article should answer a lot of your questions to help you through the maze of the process itself.

 

First Question

The first question that most readily comes to a seller’s mind is: “What is my business worth?”. Honestly, if we were sellin gour business that is the first thing we would want to know. However, there are things that need to be solved first to even get to this very important issue. Before asking this question, you have to be willing to sell your business for what the market is willing to pay. If you’re just only looking to make money, then you are not ready to sell.

 

*Insider Tip:

It does not matter what you think your business is worth, or what you want for it. It also does not matter what your accountant, banker, attorney, or best friend  thinks your business is worth. Just like home real-estate, only the marketplace can decide what your business’ value is.

 

Second Question

“Do I really want to sell this business?” is the second question to be considered.If you’re actually serious and have a real, solid reason(s) of why you want to sel, then it will most likely happen. You really increase your chances of selling if your answer is ‘yes’ to this followup question: Do you have reasonable expectations? If you answered ‘yes’ to these two questions, then you are serious about selling.

 

Taking the First Steps

Alright, let’s assume that you already decided to at least take the first few step in actually selling your business. Before you even think about placing your business up for sale in the market, some steps are required before jumping in. The first and very important step you have to complete is gathering information about your business.

The following is a checklist of the items you should get together:

  • Three years’ profit and loss statements
  • Federal Income tax returns for the business
  • List of fixtures and equipment
  • The lease and lease-related documents
  • A lost of the loans against the business (amounts and payment schedule)
  • Copies of any equipment leases
  • A copy of the franchise agreement, if applicable
  • An approximate amount of the inventory on hand, if applicable
  • The names of any outside advisors

 

Notes:

Now if you’re like most other small business owners, you will have to search for most, if not all, of the items on this checklist. Once you gather ALL of the above items (all that are applicable, that is), you should spend some time updating the information and filling in the blanks. It’s pivotal that you take a long, hard look at all of this because you have most likely forgotten much of this information. You want to have all of your information in a neat and orderly format, just as if you were going to present it to a prospective purchaser. Everything starts with this information.

You need to make sure the financial statements of the business are current and as accurate as you can get them. If you’re half way through the current year, make sure you have last year’s figures, tax returns, and also year-to-date figures. Make all of your financial statements presentable. In the long run it will pay to get outside professional help, if necessary, to put the statements in order. You want to present the business well “on paper”. Later you will see pricing a small business is usually based on cash flow. This includes the profit of the business, but also, the owner’s salary and benefits, the depreciation, and other non-cash items. If the bottom line isn’t what you think it should be, don’t panic. By the time all of the appropriate figures are added to the bottom line, the cash flow may look pretty good.

Prospective buyers eventually wan tot review your financial figures. A Balance Sheet is not normally necessary unless the sale price of your business would be well over the $1 million figure. Buyers want to see your income and expenses. They want to know if they can make the payments of the business (more on this later), and still make a living. Let’s face it, if you business is not making a living wage for someone, it probably can’t be sold, and won’t be sold. You may be able to find a buyer who is willing to take the risk, or an experienced industry professionals who only looks for location, etc., and feels that he or she can increase business.

 

*Another Insider Tip:

How much you’re willing to sell your business for is not really the big question, but rather, how much of it can you keep? The Federal Tax Laws do determine how much money you will actually be able to put in the bank. How your business is legally formed can be important in determining your tax status when selling your business. For example: Is your business a corporation, partnership, or proprietorship? If you are incorporated, is the business a C corporation or a sub-chapter S corporation? There are some new tax rules, effective January 1, 2000, that impact certain businesses on seller financing. The point: before you consider price or even selling your business, it is important you discuss the tax implications of a sale of your business with a tax advisor. You do not want to be in the middle of a transaction with a solid buyer and discover that tax implications of the sale are going to net you much less than you had figured.

Pittsburgh | Raleigh Business Brokers – Why Sell?

Pittsburgh | Raleigh Business Brokers – Why Sell?

Selling a business is an emotional process for many reasons.  The owner’s family may have owned the business for several generations.  The business owner may have started the company and spent a lot of years, sweat and tears building it into a successful, profitable business.  Accordingly, “seller’s remorse” is often a major reason for transactions to terminate.  None-the-less, there are reasons why selling makes sense or is the best avenue for the business owner.  Your Pittsburgh | Raleigh Business Brokers cites some examples:

Burnout

According to industry experts, burnout is a major reason owners consider selling their businesses.  Over time, the long hours and 7-day work weeks can take their toll.  On the opposite end, business owners who thrive on challenge may get to the point that the business has just become boring – the challenge of creating it or growing it has been replaced with the mundane daily activities of running it.  Losing interest in one’s business usually indicates that it is time to sell.

No succession option

Sons and daughters may be disenchanted with the family business by the time it’s their turn to take over.  They may have their own dreams to fulfill that do not include the family business.

Unexpected circumstances

This is the number one reason a business owner should make plans about selling even if he or she is not planning to sell for many years.  A good question for a business owner to ask is, “If an unexpected circumstance should occur tomorrow that would require me to sell my business, what would I wish I had already done?”  Unexpected events include such things as accidents, illness of owner or family members, divorce, and partnership issues.  Unfortunately, these events are seldom predicted, and too many times, a forced sale does not bring maximum value.

Need to cash out

The need to cash out may be caused by an unexpected circumstance, such as a costly accident or illness.  Many company owners have much of their personal net worth invested in their business.  This can present a lack of liquidity.  In such situations, an owner in need of additional cash has two options: borrowing against the assets of the business or selling the business.

Outside pressure

Successful businesses create competition.  There are times when a business owner discovers that the competition has built to the point where it is easier to join it than to fight it.

An “out of the blue” offer

There are times when a business may not even be on the market, but someone or some other company sees an opportunity and makes an unexpected offer.  This may be a great time to sell as the owner is likely entering the negotiations from a position of strength.

There are obviously many other reasons why businesses are sold.  The most important factor is that the owner is convinced that it is time to sell and has a clear understanding of his or her reasons.  And, whether that time is now or many years in the future, the wise owner will consider the following: “The time to prepare to sell is the day you start or take over the business.”

Call your Pittsburgh | Raleigh Business Brokers – TM Business Brokers to confidentially discuss your unique situation today!

Pittsburgh Business Brokers – Why use Us?

Why use Pittsburgh Business Brokers – TM Business Brokers?

When you make the decision to sell your business, you are taking a giant step that involves the emotions as well as the marketplace, each with its own set of complexities.  Those sellers who are tempted to undertake the sale of a business on their own should understand both the process and the emotional environment that this process is set against.  The steps outlined below are just some of the items for a successful sale.  While these might seem daunting to the do-it-yourself business owner, by engaging the help of the Pittsburgh Business Brokers – TM business brokers, the seller can feel confident about what is often one of the major decisions of a lifetime.

1.  Set the stage.
What kind of impression will the business make on prospective buyers?  The seller may be happy with a weathered sign (the rustic look) or weeds poking up through the pavement (the natural look), but the buyer might only think, “What a mess!”  Equally problematic can be improvements planned by the seller that appeal to his or her sense of aesthetics but that will, in fact, do nothing to benefit the sale.  Instead of guessing what might make a difference and what might not, sellers would be wise to seek the advice of Pittsburgh Business Brokers – TM Business Brokers – professionals with experience in dealing regularly with buyers and with an eye experienced in properly setting the business scene.

2.  Get the records straight.
Although outward appearance does count, what’s inside the books is even more important.  Ultimately, a business will sell according to the numbers. TM Business Brokers can offer the seller invaluable assistance in the presentation of the financials.

3.  Weigh price against value.
All sellers naturally want to get the best possible price for their business.  However, they also need to be realistic.  To determine the best price, TM Business Brokers will use industry-tested pricing techniques that include ratios based on sales of similar businesses, as well as historical data on the type of business for sale.

4.  Market professionally.
Engaging the services TM Business Brokers is the key to the successful sale of a business.  We will prepare a marketing strategy and offer advice about essential marketing tools–everything from a business description to media advertising.  Through our professional networks and access to data on prospective buyers, we get the word out about the business far more effectively than any owner could manage on an individual basis.

Sell My Business – Am I Serious?

Sell my business – am I serious?

There are three good questions to consider before selling your business.

First, “Do I really want to sell my business?”  If you’re really serious about selling your business and have a solid reason (or reasons) why you want to sell, it will most likely happen.

Second, “Do I have reasonable expectations?”  You increase your chances of selling if you can answer “yes” to this second question.  This includes your expectations about the selling price, the time it will take to sell your business, and the amount of seller financing you are willing to offer.

Third, “What will I do once I sell my business?”  The time to consider this is before you place your business on the market.  This may seem obvious, but many transactions fall through because the business owner did not consider what he or she would do once the business was sold.

A “yes” answer to the first two questions plus having an answer to the third question (other than “I don’t know”) means you are serious about selling.

Why is seller financing so important to the sale of my business?

Surveys have shown that a seller who asks for all cash, receives on average only 70 percent of his or her 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, again, it tells the buyer that the seller has enough confidence that the business can, indeed, pay for itself.

What happens when there is a buyer for my business?

When a buyer is sufficiently interested in your business, he or she will, or should, submit an offer in writing. This offer or proposal may have one or more contingencies. Usually, the contingencies concern a detailed review of your financial records and may also include a review of your lease arrangements, franchise agreement (if there is one), or other pertinent details of the business. You may accept the terms of the offer or you may make a counter-proposal. You should understand, however, that if you do not accept the buyer’s proposal, the buyer can withdraw it at any time. At first review, you may not be pleased with a particular offer; however, it is important to look at it carefully. It may be lacking in some areas, but it might also have some pluses to seriously consider. There is an old adage that says, “The first offer is generally the best one the seller will receive.” This does not mean that you should accept the first, or any offer — just that all offers should be looked at carefully.

Once you and the buyer are in agreement, both of you should work to satisfy and remove the 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 this 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.

What can I do to help sell my business?

A buyer will want up-to-date financial information. If you use accountants, you can work with them on making current information available. If you are using an attorney, make sure they are familiar with the business closing process and the laws of your particular state. You might also ask if their schedule will allow them to participate in the closing on very short notice. If you and the buyer want to close the sale quickly, usually within a few weeks, unless there is an alcohol or other license involved that might delay things, you don’t want to wait until the attorney can make the time to prepare the documents or attend the closing. Time is of the essence in any business sale transaction. The failure to close on schedule permits the buyer to reconsider or make changes in the original proposal.

What can business brokers do – and, what can't they do?

Business brokers are the professionals who will facilitate the successful sale of your business. It is important that you understand just what a professional business broker can do — as well as what they can’t. They can help you decide how to price your business and how to structure the sale so it makes sense for everyone — you and the buyer. They can find the right buyer for your business, work with you and the buyer in negotiating and along every other step of the way until the transaction is successfully closed. They can also help the buyer in all the details of the business buying process.

A business broker is not, however, a magician who can sell an overpriced business. Most businesses are saleable if priced and structured properly. You should understand that only the marketplace can determine what a business will sell for. The amount of the down payment you are willing to accept, along with the terms of the seller financing, can greatly influence not only the ultimate selling price, but also the success of the sale itself.

How long does it take to sell my business?

It generally takes, on average, between eight to twelve months to sell most businesses.  Keep in mind that an average is just that.  Some businesses will take longer to sell, while others will sell in a shorter period of time.  The sooner you 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 look at an overpriced business.  It has been shown that the amount of the down payment may be the key ingredient to a quick sale.  The lower the down payment, generally 40 percent of the asking price or less, the shorter the time to a successful sale.  A reasonable down payment also tells a potential buyer that the seller has confidence in the business’s ability to make the payments.

DISCLAIMER: TM Business Brokers, LLC does not offer securities for sale, real estate brokerage services, accounting, tax or legal advice, or financing negotiations. TM Business Brokers, LLC does not audit / verify any information provided by business owners and their third party advisers, and we make no representations or warranties thereto.