When most business owners decide to sell and they wish to be the one to start the process, the first and obvious place to start is with a business valuation. A business valuation gives the owner a reference point as to whether the price they hope to get for the business will be reasonable and/or achievable.

Some business owners choose the selling price for the business based on what they want in order to sell. They may have a certain amount of debt they wish to retire, money they need for retirement plus an ache that makes them think there business is worth a certain amount of money. Not a good basis for trying to convince a buyer about the asking price for the business.

Valuing your business using the “rumor” method.

Other valuation techniques include the “rumor” method. The “rumor” method is the price an owner chooses to use based on what he heard his friend sell his business. Rather than a friend, it could have been a competitor two counties over or something they read in the local paper. Once again, not a good method to use to convince a buyer on the asking price for the business.

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Deciding to sell a business you own and operate and love like a child is rarely easy. Business ownership includes many practical matters such as providing an income, helping customers, paying your bills on time etc but it also includes many emotions. These include being successful, honest, going above and beyond to help customers and employees to name a few. If it’s time for you to sell your business, consider the following 5 tips to help you be successful.

1. Avoid using high-pressure sales tactics.
Buying and selling a business is a unique set of circumstances. No two transactions are the same. You can never “sell” a business; the buyer has to want to “buy” for reasons that make sense to them. The law recognizes this by defining it as a willing buyer and a willing seller with neither party under any compulsion to close the transaction.
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As baby boomers begin to hit retirement age, many who are business owners are ready to sell. It’s created a market that has many businesses for sale.

At the same time, concerns about the economy had made it tough to get financing for many potential deals. Seller financing is one option that could be the solution to get many deals done.

Seller financing involves a seller helping to finance the sale of the business by taking back a second note on the business. It differs from a traditional Small Business Administration (SBA) loan because the seller essentially extends credit to the buyer against the purchase price of the business. However, seller financing is misunderstood by many, even though it may be the best way to sell a business during a stagnant economy.
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Selling a business and walking away can be very difficult. But in many cases, there’s a transition (“training” and/or “consulting”) period dependent on the size of the company and the role of the owner. Transitions may be as short as a month or two or as long as a year. In most situations, the buyer wants the seller to remain on board to shorten the learning curve and help with the smooth transfer of key relationships.

In the typical business sale, a transition period of four to eight weeks is included, and sometimes a “telephone consulting period” is added (e.g., 6 months of telephone consulting not to exceed 5 hours per month). Also, the seller may additionally be retained as a consultant at a negotiated rate. In some instances, a long-term employment contract is negotiated and the seller maintains daily involvement for a much longer period of time. READ MORE

The Merriam-Webster Dictionary defines Due Diligence as “research and analysis of a company or organization done in preparation for a business transaction.” Some even look at it as a pre-marital background check and counseling. But it should be noted that dissolving a merger is much more difficult than ending a marriage if things aren’t as they appear.

Ultimately, due diligence is the process of being sure that things are as they appear before a deal is sealed. For someone considering a merger or the purchase of an existing business, the review of documentation and the answers to your due diligence questions are critical. There’s no doubt it is a complex process that can be time-consuming. But with so much on the line with any merger or acquisition, you don’t want to make a decision without all of the information. You want to be sure everything is reviewed and all questions are answered to your satisfaction.
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Do thoughts of selling your business ever cross your mind? As a business owner you certainly know that the day will come when you will walk away from your company’s operations. Selling your business will likely be one of the biggest decisions of your business life.

No doubt you have a good idea of what your business is worth. But there are many factors to consider when putting your company on the market. Is now the best time to sell? Should I look for a cash deal or should I consider certain terms? What about confidentiality? 

Working with a professional business intermediary will provide the expertise to help you make those decisions. Consider teaming with a Certified Business Intermediary (CBI), a professional who fully understands what it takes to successfully sell a business. A CBI can bring significant value to the complex process and help you complete a sale that will include the best possible value and some peace of mind. 
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As a business owner, and part of the baby boomer generation, you’ve seen your share of ups and downs in the business world. The time is coming to step back and take life in a different direction. You’ve decided it’s time to seriously consider selling your business. Where do you turn? 

Many business owners in similar circumstances look first to their accountant or their business attorney, people they’ve worked with and have developed a relationship with. But the fact of the matter is they aren’t experienced in selling a business, just as you probably would not ask them to sell your home for you (which is much easier). No doubt, you’ll consult with them as you prepare to sell your business. But an initial step should be to enlist the help of a professional business broker or intermediary. 
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If you’re looking to sell a business, it’s critical to look at the value of the business. But a typical business really has two values. The “academic” value is the one determined by a professional business valuation. The other is the “true market” value. The academic value is arrived at with a formula based on the firms’ hard assets, cash flow, industry averages and multiples. The fair market value also takes those items into consideration, but then considers what buyers are really willing to pay.

For many small and mid-sized businesses hard assets like equipment, vehicles, land, buildings, and inventory may be limited. For some small businesses there may be no hard assets at all. Instead, their value is based on intangibles like employees, business processes, customer lists, location and business relationships.
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Are you thinking of selling your business? Perhaps you are thinking of selling your business or hiring a business broker? Any business owner who has sold a business on his of her own will tell you it’s a long, tedious and stressful process. It consumes time and distracts you from the day to day operation of the business. When your focus should be on maintaining or increasing the value of your business, all of your time and energy is directed to the sale process.

That’s where an experienced business broker can pay huge dividends. There are many areas where the business broker expertise pays off:
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Sure you want a big payoff, but when it comes to selling your business, money should not be the only consideration. You don’t want just any buyer, you want the best buyer.  With the market we’re now experiencing, many sellers are getting limited offers, but the buyers they choose aren’t always the ones offering the most money.

Would you consider a lower price for a buyer that fits the company’s culture? Would you consider an offer that’s a million dollars lower if it meant the difference between years of seller financing and cash at close?

It’s common for deal structures to include a variety of options which must be carefully considered and evaluated, long before you get to the negotiating table.
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Whether you are selling a business or buying a business keep the process moving. Many factors can bog down the sale of a business.Many factors can bog down the sale of a business. In fact, more than purchase price or structure, time is the most likely reason that a business sale may fail.

Time can breed frustration and fatigue. As a potential sale drags on, the owner is left in an uncomfortable state of flux. The buyer may also become frustrated as fees mount. The deal can reach the point when one party declares…”It just wasn’t meant to be.”

National figures indicate that the average business sells in nine to 12 months from start to close. Once a Letter Of Intent (LOI) has been signed, the final due diligence and closing process usually takes 30 to 90 days.

So how do you keep the sales process moving forward?
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Over the past 20 years, private-equity groups (PEGs) have become key players in business acquisitions. PEGs offer flexibility as a liquidity source, giving entrepreneurs the ability to take some cash off the table, recapitalize their company or simply sell and move on.

Private equity refers to buyout groups that seek to acquire ongoing, profitable businesses that demonstrate growth potential.

The private equity market had traditiaionlly been restricted to acquing larger companies. But increased competition for those larger operations, greater growth potential for smaller firms and an easier path to exiting the investment in the future have played a role in attracting PEGs to smaller companies.

PEGs are typically organized as limited partnerships controlled and managed by the private equity firm that acts as the general partner. The fund invests in privately held companies to generate above market financial returns for investors.
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You wouldn’t think that now is a good time to buy or sell a business. However, even in the midst of a recession the timing might be just right, creating opportunity for small business owners looking to retire and inspiring entrepreneurs looking to control their future.

Why it’s a great time to buy

More sellers are willing to consider seller financing. If you have had difficulty getting a traditional bank loan to buy a business, seller financing could be an option to discuss with your broker and the business owner. Seller financing differs from a traditional SBA loan because the seller essentially extends credit to the buyer against the purchase price of the business. This allows more flexibility with payment options, which is good news for the buyer.

Baby Boomers are retiring. For many boomer business owners it is retirement that is driving them to sell, not the economy. In fact, sellers looking to retire are choosing to sell while their business is showing a profit – showcasing that despite the economy, their business is going strong.
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There are many attributes that make a successful and strong entrepreneur. Here’s a look at some of them.

• Vision – The first attribute of an entrepreneur is vision. What made you start the journey of being a business owner? Make sure you haven’t moved away from that. If you have, find it again and re-focus your long term goals.
• Plan – When was the last time you revisited your business plan, sales and marketing plan, communication plan and productivity plan. Too many plans? Most businesses take seven to 10 years to be “successful.”
• Keep it real – and in perspective. It’s not your imagination that sales are down, customers don’t seem as happy as they used to be, employees are worried but as an entrepreneur “keep it real” till the dust settles and you can get back to it.

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Selling a business is rarely a simple and straight forward process. One of the biggest mistakes I’ve found is that the seller doesn’t put themselves in the shoes of the other parties be it the buyer, lender, landlord, employees, franchisor or whoever. This article outlines 5 suggestions for a seller to use when approaching the way to sell their business.

1. Get a professional third party valuation

This may sound obvious but naturally the seller wants as much money for the business as possible and the buyer wants to pay as little as possible. The place to meet is probably the “Warren Buffet place” with apologies to Warren Buffet. He’s on record as saying or something close to it – I would sooner pay too much for a good company than get a great deal on a company that won’t be around much longer.

2. Hire a qualified professional that you trust

Selling a business is not a quick or normally straightforward process. Each business has its own unique characteristics and is part of the dynamic global, regional and local economy as well as the specific industry it is in. Because of the complexities, ensure you have a qualified professional on your team that you trust and have complete confidence in. Apart from trust, other important components to look for include the professional qualifications from the International Business Brokers Association (IBBA) such as the CBI or Certified Business Intermediary or the state business brokers association (if one exists.) Some states require a real estate license – ensure your professional has any necessary license.
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