Selling your business is a significant decision. You’ve invested considerable time, money, and effort into building and running it—perhaps it even represents your life’s work. Now that you’ve decided it’s time to sell, getting the best professional advice is crucial. This is where working with a professional business broker can be the key to not just selling your business, but selling it at the best price and terms possible.

Here are some common questions sellers often ask, along with answers based on experience and expertise. If you have additional questions, don’t hesitate to consult your business broker.

What Can Business Brokers Do, and What Can’t They Do?

Business brokers are specialists who facilitate the smooth sale of businesses. It’s important to understand their capabilities as well as their limitations. A professional broker helps sellers price the business and structure the sale in a way that benefits both the buyer and seller. They can locate potential buyers, guide negotiations, and assist in completing the transaction.

However, a business broker isn’t a miracle worker who can sell an overpriced business. For a business to sell, it must be priced and structured appropriately. The market ultimately dictates what a business will sell for. The seller’s flexibility with terms and down payment options can also influence the selling price and the likelihood of a successful sale.

How Long Will It Take to Sell My Business?

On average, it takes about five to six months to sell most businesses. However, this is just an average—some businesses may take longer to sell, while others may sell more quickly. The quicker the broker has all the necessary information to market your business, the shorter the process is likely to be. Pricing the business right from the beginning also plays a major role. Some sellers overprice their businesses, thinking they can always lower the price later. Unfortunately, this strategy often backfires because buyers may avoid an overpriced listing entirely.

What Happens When There’s a Buyer?

When a buyer is seriously interested in your business, the broker will assist in preparing an offer. This offer may come with contingencies, such as a review of financial records, lease agreements, franchise agreements, or other important business details. The buyer’s offer will be presented for your consideration. You can accept the terms, make a counteroffer, or decline it altogether. Keep in mind, though, that the buyer can withdraw their offer at any time if negotiations don’t move forward.

Your broker will present all offers to you for consideration. The first offer might not be perfect, but it’s essential to review it carefully. Sometimes, the first offer can be the best one you’ll receive. While you shouldn’t accept just any offer, all offers deserve close examination.

Once you and the buyer agree on terms, the broker will help with satisfying any contingencies. It’s crucial to cooperate fully with the buyer during this stage to avoid any perceptions that you’re withholding information. Buyers may bring in outside advisors to review your business, and once all conditions are met, the final paperwork will be prepared and signed. After the sale is finalized, funds are distributed, and the buyer takes possession of the business.

How Can I Help Sell My Business?

You can assist in the process by fully cooperating with your broker and any other advisors, such as accountants or attorneys. Buyers will require up-to-date financial information, so it’s helpful to work with your accountant to provide this. If you have legal representation, make sure they’re familiar with the business sale process and are available to attend the closing, especially if you want a quick sale. Delays caused by your attorney’s schedule could give the buyer a chance to reconsider or amend their offer.

Ultimately, your team of advisors should all be working toward the common goal of selling your business at the best possible price and terms, while closing the deal as quickly as possible. Cooperation with all parties involved is key to a successful sale.

Copyright: Business Brokerage Press, Inc.

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The lessons learned through hands-on experience are often irreplaceable. When it comes to selling or transferring ownership of a business, inexperience can be particularly troublesome. Many business brokers and M&A advisors have observed firsthand the jeopardy business owners can face when they either attempt to sell their business on their own or engage someone without the proper experience. For instance, holding an MBA or a law degree cannot substitute for the years of tangible experience that brokerage professionals possess. Selling a business is a complex process, and there is simply no substitute for experience. Let’s examine some common errors stemming from inexperience.

First on the list is the failure to involve the CFO. An inexperienced party should not handle financial details, as serious buyers will want to meet with your CFO. This meeting will be part of the due diligence process, so it’s essential to involve your CFO early on. Organizing a meeting between your CFO and a prospective buyer is a smart move, as it demonstrates transparency regarding your financials. Inexperience in the financial realm can be highly detrimental.

While failing to include your CFO early can be a big mistake, incorrect financials can be equally problematic. An inexperienced party should not handle your offering memorandum due to the potential for errors. What might seem like a minor error on paper can be perceived differently by a potential buyer. Omitting key information could ultimately harm a buyer’s trust or lead to a reduced bid. The financial information of your business tells a story, and it’s crucial that this story is accurate and up-to-date.

The first two inexperience-related problems can cause a deal to fall apart or result in a lower final offer, but the next issue is even more severe. An inexperienced party may not understand the importance of a confidentiality agreement or may fail to execute it properly. This can be more problematic than it first sounds. 

In fact, the significance of a confidentiality agreement alone justifies working with an experienced business broker when selling your business. Without it, key employees, customers, suppliers, and even competitors might learn that your business is for sale. This disclosure could lead to chaos: key employees might seek other positions, customers might take their business elsewhere, and competitors might seize the opportunity to gain the upper hand. Maintaining confidentiality is paramount when selling your business.

Inexperience can make any endeavor more challenging. But given the high stakes involved in selling a business, relying on those without adequate experience is risky. Inexperience can do more than jeopardize a deal—it can potentially harm your business.

Copyright: Business Brokerage Press, Inc.

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