The
independent business owner who decides to sell is at the threshold
of a major process involving the emotions
as well as the marketplace.
In many cases, the business for sale represents
the seller's life work. Being the independent type to begin with--as
well as someone who knows about deals and sales--the tempting notion
sometimes arises: Why don't I handle the sale of my business myself?
Those sellers with similar temptations should first take a look at
the steps necessary for the successful business sale--and at the advantages
of taking those steps in tandem with the best possible professional
guide. Preparing the business for sale
What looks good or just fine to the seller could
make quite the opposite impression on prospective buyers. The
weathered sign out front that the seller thinks is "rustic"
might strike a buyer as in need of a fresh coat of paint. On the
other hand, improvements planned by the seller may be either unnecessary
or wrongly-conceived.
In either case, sellers would be wise to
rely on the advice of a business broker--a professional with
experience in dealing regularly with buyers and with the objectivity required
to set the business scene to its best advantage. Of course, preparing a business
for sale goes beyond outward appearances. Ultimately, a business will sell according
to the numbers. A business intermediary can be invaluable in helping the seller
provide financial records that are clear and up-to-date.
Pricing and Evaluation
All sellers naturally want to get the best possible
price for their business. However, they also need to be realistic
about the true value of the company for sale and to understand
that price is, in fact, dictated by the marketplace. To determine
the best price, a professional business broker will use industry-tested
valuation techniques, including ratios based on sales of similar
businesses, as well as the historical data of the type of business
for sale.
Marketing and Advertising
The professional business broker is key to the
marketing of a business. He or she will prepare a marketing strategy
and offer advice about essential marketing tools: everything from
a business description to newspaper advertising. Business brokers,
through their data bases of buyer prospects, professional associations
and other networks, can get the word out about the business far
more effectively than any owner could manage on an individual
basis.
Presenting the Business
The professional business broker is experienced
in handling the typical objections and negative "readings"
many typical buyers will raise. Does the business lack parking
space? Is its location less than ideal? The business broker has
the skills to balance negatives with positives, or to point out
that what appears to be a disadvantage is not always the case.
In addition to skill, a business broker also offers the seller
convenience. Sellers often fail to visualize the number of buyer
calls they would have to field if handling the sale on their own.
The business owner working with a broker can continue managing
his or her business at the same time the selling process is underway.
Negotiating the Business Sale Transaction
The business broker will be the most vital advisor
to sellers during any stage of the sale transaction. Steeped in
knowledge about negotiating price, terms, and other key aspects
of the sale, the broker will guide the seller each step of the
way. During the early stages, while the buyer is still considering
making an offer, the broker is the ideal person to follow up and
keep the deal running smoothly. Sellers working alone could lose
bargaining effectiveness by doing the follow-up themselves.
Mastering the Paperwork
Even though business owners handle mountains
of paperwork as a part of doing business, few of them have had
training in the specialized contracts and forms required for the
sale of a business. The business broker is an expert at sales
transaction details. This expertise will help guard against delays,
problems, and--that worst of all possible worlds--the "wrecked"
deal.
Qualifying Buyers
The business broker will determine the right
buyer for the right business, focusing on those prospects who
are financially qualified and who are genuinely (or potentially)
interested in the type of business for sale. For locating and
qualifying prospective buyers, a business broker uses computerized
databases to access comprehensive lists of local, national and
international buyers--all to increase the chances of selling a
business at peak value. And, almost as important, to avoid wasting
the seller's valuable time.
Maintaining Privacy and Confidentiality
When a business broker is involved in the sale,
bringing to the business only those prospective buyers who qualify,
it is also easier to maintain confidentiality during the selling
process. Until a purchase-and-sale agreement has been signed,
most sellers do not want the word to reach their customers, competitors,
employees, or even their bankers. A business broker helps by using
nonspecific descriptions of the business, by requiring signatures
on strict confidentiality agreements, by screening all prospects,
sometimes phasing the release of information to match the growing
evidence of buyer sincerity and trustworthiness.
Professional business brokers provide all these
vital services, and more, for the seller of a business. This is
one time where "do-it-yourself" just can't measure up--in
terms of money, time, and the general success of the sale.
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