Are you considering the sale of your business and wondering what your best options are? Perhaps you want to transition into retirement, or maybe you are ready for something new. Whatever your reasons for selling, you probably want to know what would be the best way to go about it.
You could try to sell your business yourself. Or you could use an accountant or lawyer or perhaps a realtor. Some people try all of these options with varying degrees of success.
However, some things to consider are:
- Do you want to sell your business for an excellent price?
- Is a confidential sale important?
- Would you like a buyer that will treat your employees and customers well?
If you want all of these things, perhaps it makes sense to consider someone that specializes in selling businesses like yours. A company that specializes in selling companies can be called a:
- Business Broker
- Business Sale Broker
- Selling Business Broker
- M&A Broker
- Broker Business for Sale
These terms may be used interchangeably.
What does a Business Sale Broker do?
A Business Sale Broker can help you to sell your business. Usually, they work together with you because you are an expert about your business, and an experienced Business Sale Broker is an expert on selling businesses. It’s essential to pick the right Business Sale Broker. Some criteria you can use to consider the best, selling business broker for you is:
- Has their business brokerage company been in business for a long time?
- Do they have experience selling your type of business?
- How extensive is their database of potential buyers?
- Do they have Business Sale Brokers in multiple states?
- How are their reviews?
- Do they have an extensive marketing program?
- Are their Businesses for sale advertised without the name of the company?
- Do buyers need to sign a confidentiality agreement to get the details?
- Do they only collect a fee if they sell your company?
- Does your business broker communicate well?
How do Business Sale Brokers sell businesses?
The first step is typically a no-cost confidential consultation. You can ask and get answers to some of the questions from the previous section. This discussion will give you and the Business Broker a chance to see if you both think it’s a good fit to work together.
The next step after preliminary questions are answered is to see what an approximate sale price will be for your company. You will need to provide some information on your business, such as:
- What is your annual revenue?
- How much money do you make from salary, profit, and perks and benefits?
- Do you have any customers that make up more than 20% of your revenue?
- What types of customers do you have?
- What products or services do you provide?
- How do you differentiate from your competitors?
- What skills do you and your employees have?
The potential sale price for your business
After they have provided some information, the Business Sale Broker will compare your business to the selling price of similar companies. While every business is unique and you can’t get an exact price for what your company will sell for, this will give you a ballpark selling price. From there, you can see if that price is enough to fund your retirement or launch you in your next venture. Almost everyone wants to maximize their sale price. Business Sale Brokers are in the same boat because they get paid based on a percentage of the sale price, so your goals are aligned.
If you decide that the estimated sale price is enough, then you can move on to the next step of signing a listing agreement with the right business sale broker once you have determined who is the best fit. The listing agreement outlines the commission to be paid if the business is successfully sold.
When the Listing Agreement is signed, the next step would be to begin a confidential marketing process.
How do Business Brokers keep the sale of my business confidential?
They do this by creating a brief overview document, sometimes called a teaser, which provides some basic information on the business but doesn’t contain the name of the company or specific location. A Business Sale Broker will use the teaser document to contact potential buyers and advertise online. Once a buyer is interested in getting more information, they sign a confidentiality agreement and provide some details on their qualifications. Then the M&A Broker will provide more information to see if the buyer is interested after reviewing the specifics. If they’re interested, they’ll contact the Business Broker with some initial questions and discuss the details of their interest.
When the Broker and buyer feel that it is a good fit at this point, then the Selling Business Broker will contact the seller to give them an overview of the buyer. If the seller is interested, then the Broker will set up a meeting or an initial phone call with the buyer, seller, and Broker.
Selling a Business during the COVID-19 Pandemic
Synergy Business Brokers has sold several businesses during the Pandemic. In many cases, the buyer and seller don’t need to meet. Everything can be done via Zoom, phone calls, and online transfer of documents, and data. Even the closing can be done virtually with funds being wired.
In some cases, the buyer and seller want to have the comfort level of meeting and then can be done with social distancing where the buyer, seller, and advisors are staying safe.
A meeting or phone conversation allows the buyer and seller to find out more about each other, answer questions, and see if they want to move forward with the process. If they do, then after the follow-up questions are answered, the buyer will make an offer if they’re going to proceed. Business Sale Brokers will help to negotiate the proposals on behalf of the seller. An advantage of working with a top broker like Synergy Business Brokers is they will typically be able to get you multiple offers. This increases your leverage in getting the best price for your company.
It also gives you a wider pool of potential buyers to choose from. If the offers are similar, you would want to select a buyer that you feel comfortable with. Not only to take over your business but also to work with. In most cases, you would be working with the buyer after the sale to transfer knowledge that you have about the company and introduce them to customers, employees, and suppliers. Also, you will be available to answer questions they might have to ensure that the business is successful without you.
Business Sale Brokers can help advise you about what is normally done in due diligence. There may be a difference of opinion between the buyer and seller. We have seen cases where buyers are treating due diligence as if they are buying a $10 Billion business when the business is being sold for $2Million. If the buyer or their advisors have come from a background of working on Billion-dollar deals, they may be accustomed to this level of due diligence. It’s important to have an agreement on what due diligence will be done before you invest too much time in this process. Business Sale Brokers can help to overcome differences during due diligence between accountants, lawyers, and the buyer and seller.
Negotiating a Contract
Some times the purchase agreement is negotiated during due diligence, and sometimes it is done when the due diligence is nearing completion. There are pluses and minuses to both approaches. For getting a deal done quickly, it is best to start negotiating the contract at the beginning of due diligence. But, from the standpoint of cost savings, the buyer and seller may prefer to wait to accrue legal costs until after due diligence is close to completion. This will allow both sides to be more comfortable that a deal will be finalized and uncover any surprises in due diligence.
As a business owner, it’s essential that you keep the revenue and profitability up during the due diligence phase. If the net income takes a nosedive, this is likely to scare off buyers. In some cases, you may have to renegotiate the price or terms of the deal to keep the deal alive if problems occur during due diligence.
This is another area where a Business Sale Broker can be of assistance in allowing you to spend less time on the deal and more time making sure your business is healthy during the business sale process. Also selling Business Brokers screen out potential buyers so that you are working with the buyers most likely to close on your business. Ones that have the proper financial resources and motivation.
Closing the Deal
A lot of issues can come up, which can derail a deal. It helps to have an experienced Business Sale Broker on your side who can guide you. Their experience allows them to draw from solutions to problems that have worked in the past but also improvise because no two deals are alike, and solutions can be as unique as the challenges that can occur. It could be issues involving partners, advisors, changes in the industry, financing, or a difference of opinion in what should be included in a sale or contract.
Synergy Business Brokers
We have Senior Business Sale Brokers in TX, NJ, NY, CT, MA, and PA. We sell businesses throughout the East, Midwest, and South. Our Potential Buyers number over 28,000 and come from every state and from dozens of countries around the world. We specialize in selling companies in manufacturing, healthcare, construction, technology, services, and distribution that have yearly revenue of $700,000 – $50,000,000. We have sold hundreds of companies in these industries. If you have a business that fits these criteria, we provide you with a free, confidential consultation. We’ll answer your questions, find out more about your business and let you know if we think we can meet your price expectations. For more on us, you can read about our 15 step business sale process and watch our corporate video.