Don’t Wait! Selling Your Business Takes Time

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TakesTime2aWhen you sell a home, your realtor walks through your house, takes some pictures and lists your property on MLS. They determine the starting list price based on features of your home and comparable in your area. This process usually takes a few days. Selling your business is NOTHING LIKE THIS.

We have to analyze your business, develop the value, set up the marketing program and start soliciting our current pool of buyers. If we had a buyer on your business the very first day we got the listing, and we negotiated an acceptable price and terms with the buyer, it would still take 60-90 days to get to closing from that point. It is not uncommon for a new business listing to be on the market for months.

We have literally had people call us on a Friday and said “can I have my business soldTakesTime1a by Monday?” This is no joke, and honestly, this is not a business we chose to represent.
If your goal in 2012 is to sell your business, we should be talking now and getting prepared.

Why Do a Business Search?

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MagnifyingGlassBusiness buyers want to replace an income, have more control over their destiny, and increase their wealth opportunities, but may not know where to start. Searching for the right business can take months or even years using the old standard method of reviewing whatever comes on the market at the time it comes on the market. Sometimes that means making do with what is available – “compromising”.

Although this method actually works in many cases, a more efficient means of finding a business would mean instituting a focused search process. In a formal search, the broker is working for the buyer rather than a seller. The broker seeks out businesses based on the buyer’s experience, financial ability, location, and specific business types. The broker contacts businesses that meet the buyer’s criteria, assesses potential seller’s interest, gathers data, and assists in negotiations. Using this process, the buyer is in control and has options.

Often, from the seller’s point of view, they don’t want to be “For Sale”. Keep in mind that many, many businesses sell every year that are not advertised for sale. Business owners may be willing to talk about selling if they know the buyer is serious. There’s no better way to prove how serious a buyer is than performing a focused search. To learn more, contact one of our brokers.

Valuations: When You Can Retire?

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RetireIf you own your own business, odds are that your business is your largest asset. Do you know what it is worth? Really know? If you have talked with your financial planner in the last few years, they are probably asking the same question so that they can get a true picture of when you will be able to retire.

If you haven’t done a formal valuation, you might be leaving significant money on the table. We suggest having an independent, certified professional perform the valuation for your company.

Many times, business owners are looking to hand the business off to family or employees. To get more specific, we had an owner that thought his business was worth $750,000. When we walked him through a true valuation with an independent firm, the value of his business was closer to $1,000,000. He was selling his business as part of his transition to retirement. Imagine the smile on his face as a result of having an extra $250,000 in his pocket that he wasn’t really expecting.

As we have talked about in previous posts, this is another reason that you have to keep clean books. The valuation process requires a review of three years of tax returns, cash flow analysis and other general questions. If that list made you nervous, you know you need to focus on this! Talk to your broker to get this figured out.