Selling a small business in California can be a big undertaking. Hire a California-certified business broker who can assist the business owner who wants to sell and mark the end and start of significant milestones.
The end milestones include deciding it is time to stop being a small business owner. This encompasses the intellectual, emotional, and personal motivations that business ownership entails, such as getting out of bed every morning, going to work, and undertaking the numerous complex tasks that business ownership demands, day in and day out.
The start milestones include the freedom to get out of that ‘bucket list’ and tackle those things that you never had the time to consider but always wanted to do. Perhaps it means connecting with family and friends, that there simply wasn’t the time to do so. It also means starting and creating new habits. We all work from habits, and so starting new ones can be a challenge.
Therefore, it makes sense to get some help; obtaining a California-certified business broker can streamline the process.
A business broker holds a license from the California Department of Real Estate to handle the sales of privately held businesses in California. Ensure you hire a broker with the necessary license to maximize the benefits of business sales and deal transactions.
A business intermediary can help you take the necessary steps to plan a business exit. Suppose you want to sell your small business. In that case, the right broker can guide you through the steps required to value and successfully sell it to a strategic Buyer or an independent entrepreneur.
If you plan to sell your small business in California, here’s why you might want to hire a broker.
Role of a Business Broker in Selling a Small Business
The role of a business broker, such as Andrew Rogerson of Rogerson Business Services, is quite extensive, but we’ve broken it down into three key steps.
1. Gather the documents
The California business owner, CFO, and business broker will collaborate to evaluate the small business’s performance and assist in organizing the financial statements. These documents are critical in both the business valuation process and later, when the business is put on the market to find a Buyer. They are essential for a Buyer and any lender that the Buyer needs to approach to obtain finance to buy a small business.
California business brokers should prepare a business valuation using various methods to determine the company’s value.
Having a business broker for this step is especially important, as they must purchase a privately held small business with non-disclosure data to help determine the most accurate and up-to-date value of the company. Additionally, the business owner will have questions about the structure and details of the small business selling process, which will often lead to further discussion, ensuring the company is valued and presented to the market accurately.
2. Reach out to potential buyers
A business broker provides a business owner with a general idea of what to look for in a Buyer and simultaneously completes specific tasks as part of their responsibilities.
Some of these obligations include setting up interviews with prospective buyers, requiring confidentiality agreements, managing Buyer questions and concerns, and reviewing financing details with potential buyers.
This step is the most time-consuming, but it’s also one of the most critical parts of selling a small business. During this process, the business intermediary manages the various steps while keeping the Seller informed, ensuring they understand what is happening and have their questions answered.
3. Financial due diligence
The ultimate goal is for the Seller to receive an offer from a Buyer via the business intermediary. Once the Seller receives the offer, the broker will work closely with the Seller and Buyer to ensure the offer, including its terms and conditions, is acceptable to both parties. The process may include a team comprising attorneys, financial planners, tax experts, industry experts, and CPA accountants for each party, who offer suggestions. This allows for easier preparation of the final set of legal documents when the time is right.
With the offer from the Buyer negotiated and accepted by the Seller, the Buyer has the opportunity to review the Seller’s representations, which constitute the due diligence process.
The business broker will work with the Seller and Buyer to review various documents to ensure success in the due diligence process. The primary documents will include leases, sales contracts, employment agreements, and other agreements that are critical to the business and its industry.
The Seller should expect their broker to provide suggestions on Timing and how to proceed through the various steps to reach the point where due diligence is close to completion. However, it’s now time to open escrow, a process used when selling a business in California.
4. Escrow process
A California-licensed company typically handles the escrow process. Its role is to be a neutral third party to collect deposits and other money from the Buyer and its lenders while obtaining Federal and State of California releases for the Buyer for items such as IRS clearances, state tax clearances such as sales tax and payroll clearances, and other items specific to the business and its industry.
This is also the phase where the final legal documents are prepared, taking into account any lender, landlord, and other legal requirements that are critical to the transaction.
Why Work With Andrew Rogerson?
Selling your business can be a life-changing event, so it’s essential to plan for it carefully.
If you’re listing a small business for sale in California, you’ll want to find a reliable business brokerage firm. At Rogerson Business Services, a team of experienced professionals works to plan and conduct the buying and selling of a small business process in California.
You can also consult with Andrew Rogerson on how to increase your overall value.
Finally, Prepare an Exit Plan
While there are many other details to be aware of when selling your small business, hiring a Certified Business Broker, such as Andrew Rogerson of Rogerson Business Services, can ease some of the pressure and ensure you’re getting the most out of your sale.
If you find yourself asking questions like, “How do I sell my business confidentially?” ” How much is my business worth?” or “How to prepare a small business for sale?” Now is the time to contact Andrew Rogerson.
