Am I ready to sell my business?

The best way to answer that question is to examine your true reasons for selling. The more the decision is driven by rational planning and the less by emotion, the more likely you are to be able to close a successful transaction. A good broker can give you an independent look at your expectations of the selling process and help you separate your emotional investment in your business (“It’s priceless.”) from the market’s valuation.

What’s the business worth?

Although there are many ways to value a business, the fundamental one is simple: What’s a buyer willing to pay for a business? And even though it all starts with established valuation guidelines, the art of selling a business also involves knowing how to prepare your business for sale to make it the most attractive, qualifying and understanding the motivations of potential business buyers, and very careful sales negotiations.

The danger of pricing a business for sale too low is obvious. The danger of an asking price that’s too high is less obvious, but just as dangerous. If the initial offering price is unreasonably high, savvy business buyers with the ability and desire to close a deal won’t even give it a second look. If you then have to reduce the price to a reasonable market level, you may look as if there’s something wrong with the business and you weaken your negotiating position.

How do I prepare for the selling process?

You should compile the following documents and begin organizing and updating the information into an orderly format to present to a prospective business buyer:

• Profit and loss statements for three years
• Federal income tax returns for the business
• A list of fixtures and equipment
• The lease and lease-related documents
• A list of the loans against the business (amounts and payment schedule)
• Copies of any equipment leases
• A copy of the franchise agreement, if applicable
• An approximate amount of the inventory on hand, if applicable
• A list of outside advisors

It is also important to clean up and repair any areas of the business that warrant attention. Clutter and defects raise concerns that there are more serious problems that exist with the business. Even if you decide not to sell, such improvements are simply good for your business.

How can I market my business confidentially?

Confidentiality and professional discretion are essential to the process of selling a business. A good business broker will safeguard the process through several steps:

Pre-qualifying the buyer

A business broker will screen potential buyers, enhancing confidentiality by limiting the exposure to the most promising and financially qualified prospects instead of those who are not serious and ultimately, a waste of your time.

Marketing Strategies

As the intermediary, a business broker begins by advertising your business for sale with general, non-specific descriptions that are phrased to attract qualified interest without revealing the specific name or location of the business. Also remember, a typical business listing may last for 6 to 12 months and without the filter of a good business broker, confidentiality becomes harder and harder to maintain.

Managing Information Flow

A business broker guards the release of information about the business for sale until evidence shows buyer sincerity, dependability and the business buyer has signed a confidentiality agreement. That caution starts at the beginning and often lasts until the sale is finalized.

How long will it take to sell my business?

In general, the average time for a business to sell is usually six to eight months, but some will take longer to sell and others less. Your odds of a quicker sale are increased by having all the information ready to begin the marketing process in a timely manner. It is also important that the business be priced properly right from the start.