You have worked hard to build your business. When it is time to sell your business, it is crucial to follow a proven formula so that your business sells fast, and for top dollar. We are Business Brokers and have been selling businesses in California since 2006. In our experience, businesses sell for top dollar when a business owner plans his or her exit for the business. This means getting the books and financial records in order, create written standard operating procedures, and even a mini-business plan for the transition. Here is our guide for the successful sale of your business,
- What is your business worth? Get a Business Valuation
Want to sell your business in 2020? The first thing you need to do is get a business valuation. You’re in luck! We can do this for you. Contact us here for a free and confidential business valuation.
We will send you a non-disclosure agreement so that you will feel more comfortable sharing the info we will need to review to prepare your business valuation.
What information do we need to prepare a business valuation? At the very least we will need to review 3 years of Income Statements and Balance Sheets. Sometimes we also like to review the last 3 business tax returns. There are several factors we consider when valuing a company. Our experienced business broker will give you a range as to what your business is worth if sold today.
- Draft a Listing Agreement
If you (business owner) decided to move forward and engage us in an agreement to find a buyer, we will prepare a draft listing agreement for your approval. Just so you know, we hate long term agreements. Most of our agreements are for 6 months or less, then they renew for 30 day periods. Just so you know, on average, it takes 9 months to find a buyer and sell a business. So why only a 3-6 month agreement? Well, we want you to feel comfortable with your agreement and we need to be accountable. If you feel we are not doing our job, you can fire us!
By the way, we do not charge any up-front fees. We only get a fee IF and WHEN we sell your business. No sale, then no fees.
- Prepare a Confidential Prospectus / Business Information Memorandum
We will meet and become more familiar with you and your business. We will also get more comprehensive information from you. Income Statements, tax returns, asset lists, leases, employee roles, etc… Then we will write a “prospectus” that we will share only with qualified buyers who have completed a non-disclosure agreement. Let’s be very clear. The sale of your business should be a highly confidential process. When we shop your business to potential buyers, we use “blind” ads. Only qualified business buyers will see your company’s confidential prospectus.
- Pre-Qualify your business for Bank Financing
We like to organize financing for your business BEFORE we look for a buyer. This step opens the market of potential buyers substantially. More potential buyers = more offers = better price! If your business is priced at $1,000,000 it will be more “sell-able” if a Bank is willing to finance the purchase. A buyer need only come up with 20-30% of the price of your business if the business sale is financed by a bank.
- Market the Business for Sale, Confidentially!
The marketing strategy of selling the business will vary by business type, but generally we will find a buyer from our registered buyers pool, a marketing and ad strategy across the most important business for sale websites, trade magazines, regional papers, and/or we look for strategic buyers and reach out directly via phone, letters, and social media.
We solicit offers from all interested Buyers. We negotiate the best price & terms. You, the seller, decided which Buyer and transaction suits your needs the best.
- Due Diligence
Due Diligence is a period of time where the Buyer gets to review and verify the businesses books, bank statements, tax returns, leases, etc..
Escrow is a third party, neutral service that holds the buyer’s funds until the seller delivers the business assets. Once both sides complete their obligations, escrow releases the monies to the Seller and assets to the Buyer.
- Training / Transition
Once the deal closes, the Seller usually trains the Buyer, and introduces the clients and vendors. This time period is usually 1-3 months (or more). The amount of training/transition is negotiated well in advance.
If you would like to get started planning for the sale of your business, please contact us. We are Business Brokers in Southern California with a presence in Riverside, San Bernardino, Orange, & Los Angeles Counties. Email or call us today at 1-800-Biz-Broker.