Selling a business is often a first time event filled with unidentified obstacles for many business owners. Selling a company usually involves both economical and psychological factors. Many owners invest lots of hard work branding, nurturing and growing their business. Once they have decided to sell, business owners will face many concerns. An experienced business broker will help the owner address these items with proper planning.
A major concern of a business owner is obtaining maximum price when selling his or her business. The asking price is what the owner desires, selling price is what the owner gets and fair market value is the highest price that a buyer will pay and lowest price an owner will accept. A professional business broker will help the parties reach that fair market value.
Today’s potential buyers are more intelligent and demanding than those buyers of yesteryear. Many buyers are in search of the fail proof business – the majority of which are unwilling to make the leap-of-faith necessary to pull the trigger and purchase a company. Buyers of today are far more concerned about the financials than previously. They are more educated and expect to buy a company and continue to operate as is with minor tweaks along the way.
A business owner should realize that often the buyer looks for growth opportunity in the business but is only willing to pay a price based on historical operating results. The buyer’s rationale is that only he or she should benefit from their future efforts, not the seller. The price to be paid in a buyer’s mind is based on the business owner’s past results.
Still, there are things that an owner should do before deciding on selling a business. All hidden issues should be resolved beforehand as they will often kill a deal more times than not. All potential legal, financial and operational items need identified and handled up front. The financial statements should provide a proper reflection of the true earnings of the company. An experienced business broker is invaluable in this process. This professional can also assist with identifying the team members necessary to handle potential problems before they become a problem.
Finally, the Seller should be realistic with his or her asking price. Starting too high will often simply scare buyers away and often sends an unintended message to the buyer that the owner is simply unrealistic and not serious about selling his or her business. Sellers think that they can always come down on price. The fallacy with this thinking is that the buyer merely moves on to other realistically priced companies. The professional business broker can advise owners on what is reasonable or not.