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American Fortune Business Broker Services offers several different business sale support programs categorized by the size of the business and complexity of the deal. The complexity of a business sale increases with the size of a business and whether the sale will be handled as asset sale or a a stock sale.
Selling a business successfully requires expertise and experience with overseeing buyers due diligence, negotiation, problem solving, processes & procedures, tax reduction & deal structuring. Obtain experienced & expert assistance from a qualified business broker to achieve a successful sale. Our business broker services include pre-sale preparation, valuation and sales price, screening buyers, due diligence, negotiations, closing the deal and ongoing assistance to successfully sell a business to per-identified buyers.
Most business sellers are unaware of the tactics utilized by buyers and their advisers. Many buyers will start by telling the seller that price and terms are no problem but as they start their due diligence they begin utilizing negotiation tactics to substantially reduce the purchase price. Some of these tactics include deliberate but indirect disclosing of the fact that the business is for sale to employees, competitors, customers, bankers and other parties. With the damage done the seller is willing to sell the business at a much lower price just to avoid business loss. Seller financing or Earn Outs are another area where many Sellers are mislead. Many buyers have no intention of paying off any or all of the Sellers Note or Earnout. The buyer and their attorneys are very skilled in drafting agreements that allow these buyers to get away with such gimmicks and yet appear to be ethical. Law suits filed by buyers against sellers are common, often these law suits are nothing more than ploys for the buyer to get back some of the money they paid the seller. There are many others tactics to watch out for. Since business owners typically sell a business once in their life time they do not have the experience or expertise to protect their interests or negotiate a good and fair deal for themselves. Your best bet is to obtain the assistance from a expert business broker with good experience and expertise to help you with the sale.
The whole point of Business Broker Services is to provide expertise and proven experience to business owners to assure a successful sale at the highest possible market price. Below are the most important areas to focus on in the sale of a business.
Best Practices of Preparing a Business For Sale
Don’t wait until the business must be sold, for either economic or emotional reasons. Pressure to sell a business creates anxiety and can force a company into accepting a deal that’s not good for the seller–or for the buyer. Proper planning to sell a business should begin at least 3 years before it goes on the market. This gives you time to, 1) devise a plan for being thoroughly ready, 2) collect materials you may not already have prepared (a business valuation, documented processes & procedures, etc.) and, 3) maximize your asking price. Be sure records are complete for at least 5 years back and be current on all accounting and legal matters.
Engage the Services of an Experienced Business Broker
A business broker with extensive knowledge, education and experience will bring about substantial value to successfully market the business for sale. Facilitate the buyer’s due diligence process, negotiate pricing and contract terms, structure the deal in your benefit, structure the sale to minimize the taxes on the business sale and sell your business at best possible price and best terms.
As Much as Possible, Carry on Business as Usual
Don’t become so obsessed with the sale of your business or a buyer’s interest that attention wavers from day-to-day demands which will affect sales, costs, and profits. Since the selling process could take as long as a year, you need to keep a healthy and steady business.
Price it Right!
A business owner’s natural tendency is to overprice their business. It happens all the time. While the inflated price looks great to the owner (you), buyers won’t express any interest. They don’t want to spend time negotiating down to a price that is more reasonable, so overpriced businesses for sale will sit on the market a long time and, perhaps, not even sell. Due to this, it’s best to involve others when setting your business’s sale price. The term “others” could include additional executives from within your company, a trusted accounting firm or a business broker who knows how to value a business. Should you seek any outside professional service to value your company, there will be a cost. This will most-likely be made-up for with a quick sale at the right price and terms.
Obtain a Professional Third Party Business Valuation
No one wants to spend unnecessary money when they are preparing to sell their business, but the facts behind the effectiveness of hiring business broker companies to independently value a business cannot lie. According to a recent study, companies that utilized a third party valuation when selling a business had an 80% chance of selling at a higher price. Those that didn’t choose to use a valuation not only missed out on a higher sale price, they reduced their chance of selling at all! The same study concluded that organizations that don’t use a business valuation or a business broker companies only stand a 17% chance of selling.
Create a Detailed List of Furniture, Fixtures and Equipment
Buyers will want a complete list of equipment and will inspect it to ensure everything is in good working order. Take the time to do these inspections prior to selling your business. Polish things up, have maintenance and repairs completed prior to putting your business on the market. This will give the prospective buyer less leverage for negotiating when the time comes.
Present a Great Appearance
Nice looking businesses sell first! Buyers deduct large amounts from their offering price for businesses that are in less-than-top-shape. Keep the premises neat, clean and in good repair and if it’s not, clean things up before going to market.
Provide Options on The Real Estate
If you own the real estate, provide an option to sell or lease the property because some buyers may want to lease the property rather than purchase it. If you offer the opportunity to lease the property, make sure that the lease price and terms are competitive with the local market lease prices and terms.
Have a Good Reason to Sell Your Business
Cautious buyers will want to know why the business is being sold. Primarily because they want assurance that there is nothing wrong with it. Rather than hope such a topic won’t come-up, address it first and have a good answer ready. Even if the reason notes some business troubles, the buyers will appreciate up-front honesty and can proceed in discussions knowing they’re dealing with an honest owner.
Have no Surprises
Give interested buyers ALL the facts up front. Most negatives can be overcome if known by all parties from the beginning.
Sign a Covenant Not to Compete With The Buyer
A legitimate concern for buyers is the possibility that the previous owner may become a competitor of theirs after the business sells. Offering to sign a non-compete that includes an appropriate limit on the proximity and time frame of such competition is appreciated by buyers and is also considered reasonable within business negotiations.
Be Flexible in The Sale of Your Business
Keep the ball rolling once an offer has been made. Study it closely. Just because the offer’s price may be lower than desired, the offer may have other points that will offset it such as higher seller financing payments or interest, a consulting agreement, more cash upfront than was anticipated or a buyer that the business is comfortable with. If a counter-offer is necessary, do so only on those points that are of highest importance. Be willing to negotiate for a win-win in order to sell your business.
When you begin working with an interested buyer, plan your negotiation strategy successfully. We strongly advise spending a little money at this point just to get the input from a business adviser’s perspective. Negotiating strategy isn’t everything, but is is probably the most significant factor in the success of selling your business. Remember, your goal is to sell, not to beat the buyer at some negotiation game. You and the buyer should work as a team to get to a closing. Don’t allow yourself to get bogged down in disputes with your buyer. Don’t allow your ego to distract you from satisfying your underlying need to sell. Work with your buyer as an ally. Focus on interests, not positions. Generate a variety of solutions before deciding what to do about any particular problem. Try to resolve the toughest issues with objective criteria, independent standards and market norms.
Wrap it up Quickly
Even the best buyer prospects can change their minds overnight. After the buyer makes a commitment to buy, get an offer to purchase in writing and a sizable, non-refundable earnest money deposit. After the offer to purchase agreement is signed, close as soon as possible. Your business isn’t sold until the money is in your hand. Make sure the check clears before you set plans in motion for that well-deserved vacation.
Clients utilized American Fortune Business Broker Services in the following areas of the USA: Columbus Ohio, Atlanta Georgia, Lexington Kentucky, Bowling Green Kentucky, Nashville Tennessee, Memphis Tennessee, Cincinnati Ohio, Dayton Ohio, Toledo Ohio, Los Angeles, Cleveland Ohio, Pittsburgh Pennsylvania, Baltimore, Maryland, Indianapolis Indiana, Chicago Illinois, Detroit Michigan, Flint Michigan, Tampa Florida, St. Louis Missouri, Kansas City Kansas, Des Moines Iowa, Minneapolis Minnesota, Louisville Kentucky, Oklahoma City, Oklahoma, Dallas Texas, Fort Worth Texas, Denver Colorado, San Francisco California, Salt Lake City Utah, Phoenix Arizona, Lexington Kentucky, Los Angeles California, San Diego California. Our corporate offices are located in Los Angeles, California, Louisville, and Kentucky.