The above results point out that, the more serious or valid reason for sale, the higher the likelihood that the business will sell.
Despite its age the results today would probably be more dramatic. Most of those looking for a business to purchase in today's market would shy away from businesses that are under-capitalized, showing insufficient profits or any in which the seller was just attempting to sell for profit only. Today's buyer is better educated, has more knowledge about business and is more wary then his or her predecessor. The financial records must be complete--all information available- and the seller should have a valid reason for sale.
There is an old saying among business brokers. It takes a willing seller- and a willing buyer- to complete a successful sale. The moral of all this is that the more valid the reason for sale, the better the chance the buyer. Some recent studies have revealed that the time it takes to sell a small business has increased dramatically over the years. For example, in 1978 the average time took was only 57 days. In 2001, the average length of time was 225 days. That means that it now takes almost four times longer to sell a business than it did 23 years ago. The intervening years show the gradual increase in the time necessary to sell a small business. Why has this time factor increased?
Here Are Just A Few Of The Reasons:
•Buyers are better educated and informed
•Buyers are more reluctant to make that leap of faith so necessary to go into business for oneself
•Buyers require more information from a seller
•Buyers and sellers use more outside advisors
•Requirements for the closing have increased due to more governmental regulations
There are obviously additional reasons depending on the nature of the business, complexity of the deal, buyer and seller cooperation and the time schedule of the advisors in the transaction.
Sellers can assist in the process by gathering all of the information prior to going to market. For example, such items as: an equipment list, lease information, tax data, list of licenses and permits, and existing loans, leases and equipment debt, plus any other documentation that a prospective buyer might want to review, or any documents that might be helpful in drawing closing papers
A business broker moves this process along by making sure that everyone involved is doing what is necessary to get the deal done. Everyone involved in the transaction must remember that time is of the essence.
GUIDE TO SALE YOUR BUSINESS
Selling Strategies for Your Business will sell quickly- and with fewer problems.
Why should Ameribusiness sell your Business? We provide a full service in Business and Commercial sales, Business Valuations and Acquisition Strategies.
Confidentiality, as well as establishing the right selling price, is crucial in the success of the deal.
• Business sold through professional business brokers usually are sold for a higher price than those sold by owners.
• Your "business for sale" is handled confidentially. Thus, your employees, customers, suppliers do not know the business is for sale. All prospective buyers sign confidentiality/non- disclosure agreements.
• Ameribusiness is currently working with several qualified buyers looking for a business to buy.
• We service a sale through closing. Our experience allows us to anticipate and handle problems that might negate the sale process.
Follow these steps to sell your business
1. Consult and Advice
2. Evaluation and Structure
6. Qualifying Buyers
7. Confidential Introduction
8. Follow - Up
10. The Closing
WHAT BUYERS LOOK FOR
1. Provable Books and Records. Buyers want track records, proof of the sales and profits that the business has made in the past.
2. Reasonable Price and Terms. Usually, buyers won't even look at a business that is not priced competitively, too high or too low.
3. Leverage. Most businesses are sold with seller financing.
4. Living Wage. Buyers want to know they can make a decent living wage from the business (after debt service).
5. Furniture, Fixtures, Equipment and Vehicles. A complete list of all assets will be needed and everything should be in working condition.
6. Lease. Any buyers will want a good lease (whether your existing lease is assigned or a new lease is written). Terms and length of the tenancy must be pre-arranged.
7. Training. Most buyers have not owned your type of business before and will need training. Be prepared to train it is customary and usually required.
8. Appearance. Nice looking businesses sell first! Have necessary repairs done prior to showing and keep the business neat, clean and organized.
9. Covenant not to Compete. Buyers are afraid you may go into competition with them and take their customers. A promise not to compete within an appropriate distance and time is normal for many businesses.
10. A Good Reason for Sale. Buyers are always concerned about this. They are afraid you may be selling because of some undisclosed fact, which may hurt the business in the future. Buyers must see a logical reason for selling.
11. No last minute surprises. Surprises will scare away any buyer. If we know all the facts up front, almost any problem can be solved or overcome in all negotiations. Please be sure that you have told us all about your business, including the following; Are there any problems with the landlord or lease? Are there any loans against the business? Are there equipment leases? Are you in compliance with zoning, health other regulations?
12. Time is of the essence. Buyers are often looking at more than one business when they make an offer. A buyer's offer can be withdrawn any time until it is accepted and delivered back to the buyer. If the offer is not responded in a reasonable time, the buyer may loose interest in the business and move on to another.
STEPS IN THE PROCESS IN SELLING A BUSINESS
1. Commitment. Your commitment to us is to sell your business at a price and terms consistent with what the marketplace will bear.
2. Documentation. You provide us with all the necessary documents and data required to sell your business. None of this is released to a buyer until you have a firm sales agreement, unless your permission is given.
3. Valuation and Pricing. We analyze your business and suggest the best price and terms.
4. Professional Presentation. We prepare a complete marketing presentation describing all aspects and potential of your business.
5. Advertising. We advertise your business and others like it to get the highest possible response and the greatest number of prospects.
6. Qualifying. We weed out unqualified buyers and “tire kickers”
7. Showings. We introduce your business to potential purchasers. We discuss the various components and benefits of the business with the potential buyers.
8. Meeting. A possible meeting with you the potential purchaser and us is set up to cement the buyer's interest and give you a chance to learn more about the buyer.
9. Offer to Purchase. We represent your interests to get the best possible offer. We will present the offer and explain the terms and conditions of the offer to you.
10. Accept the Offer. You either accept the offer as it is written or you write a counter offer. We conduct the negotiations with the buyer to get the agreement you want.
11. Mutual Acceptance. When both parties agree to all terms and conditions of the sale, sign all counter offers and amendments, it then becomes a Purchase and Sale Agreement or the basis for an agreement.
12. Assist with Financing. When the buyer needs assistance in working with leasing companies and banks, we guide them to the right path.
13. Inspection. Your purchaser meets with us and you to examine your financial records. This can be the most crucial part of the whole process.
14. Contingency Removal. Your buyer removes all contingencies and the agreement becomes a binding contract for Purchase and Sale.
15. Lease Assignment. We work with your landlord, if needed to get a lease assignment or a new lease satisfactory to the buyers.
16. Closing Preparation. You provide all necessary information to the appropriate closing attorneys so they can prepare all the closing documents for your review prior to closing.
17. Inventory. You and your purchaser meet to take inventory (if it applies for your business).
18. Closing. All parties meet to execute the final closing documents, security agreements, installment note, bill of sale and other necessary documents. The buyer will pay the balance of their down payment and for any inventory not involved in the purchase price.
A successful seller-buyer meeting is very important to a business sale. It gives the buyer a chance to get more comfortable with you and the business; and it gives you a chance to check out the buyer.
To have the best meeting:
1. Meet a prospective buyer with the Broker present.
2. Discuss the good points of your business and its potential.
3. Explain the operation of your business and concentrate on its unique features.
4. Be sure to explain your reason for sale in a positive manner.
5. Price, terms and brokerage fees shouldn't be discussed. Negotiations could be damaged.
6. Financial records need to be presented with the Broker present.
DO'S AND DON'TS IN SELLING YOUR BUSINESS.
SELLING YOUR BUSINESS.
SELLING YOUR BUSINESS WITH US
1. Do keep good records and have them ready. A good set of books can significantly increase the chances of a successful and profitable sale.
2. Do allow sufficient time to sell your business. Selling a business is much more difficult than selling a house! You should allow up to a year to complete the sale.
3. Do offer terms. Smart buyers (the kind you want) know that almost all business sell with terms.
4. Do consult a knowledgeable business broker about the value of your business. Successful brokers know what various businesses are actually selling for. Be careful of "magic" formulas.
5. Do use a professional business broker to sell your business. Your savings and peace of mind should far outweigh the cost of doing so
1. Don't wait too long to sell. The best time to sell is when business is good. Don't wait until poor health or a downturn occurs. Sell from strength!
2. Don't sell to the wrong buyer. Your competitor, supplier or favorite employee is probably not the right buyer, willing to pay the right price.
3. Don’t overprice your business. Under pricing will cost you money; overpricing will cost you the sale. The “I can always come down in price” attitude sounds good, but it eliminates the best buyers. Your business stays on the market too long and you end up with less than you should have..
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