Why Hire a California Business Broker to Help Sell your Small Business?
Selling a small business in California can be a big undertaking. Hire a certified business broker that can assist the business owner who wants to sell, can mark the end and start of significant milestones.
The end milestones include deciding it is time to stop being a small business owner. This includes the intellectual, emotional, and very personal motivations business ownership requires getting out of bed every morning, going to work, and doing the many hard things business ownership demands; day in and day out.
The start milestones include the freedom to get out that ‘bucket list’ and tackle those things that you never had the time to consider but always wanted to do. It perhaps means connecting with family and friends that there simply wasn’t the time to do. It also means starting and creating new habits. We all work from habits and so starting new ones can be a challenge.
It, therefore, makes sense to get some help; obtaining a California-certified business broker can make the process much more streamlined.
A business intermediary can help you take the necessary steps to plan a business exit. If you’re looking to sell your small business, the right broker can walk you through the appropriate steps in valuing and then successfully sell a small business to a strategic buyer or an independent entrepreneur.
If you’re planning 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 like 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 the business broker will work together to assess the small business’ performance and help organize the financial statements as these are critical documents in both the business valuation and later when the business goes to the market to find a buyer. These documents are important for a buyer and any lender a buyer needs to approach to get finance to buy the small business.
California business brokers should prepare a business valuation using various methods to arrive at the value of the company.
Having a business broker for this step is especially important since they have to buy a privately-held small business with non-disclosure data to help arrive at the most accurate and up-to-date value of the business. Additionally, the owner of the business will have questions about the structure and details of the small business selling process that will often lead to further discussion, so the company is valued and presented to the market accurately.
2. Reach out to potential buyers
As a business broker gives a business owner a general idea of what to look for in a buyer, they will simultaneously complete certain 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 many steps while keeping the seller informed, so 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 make sure the offer, including its terms and conditions, is acceptable to both parties. The process may include a team made up of attorneys, financial planners, tax experts, industry experts, and CPA accountants for each party offering suggestions, so when the time is right to prepare the final set of legal documents, this is easier to do.
With the offer from the buyer negotiated and accepted by the seller, the buyer gets an opportunity to review the representations of the seller or what is called the due diligence process.
To succeed in the due diligence process, the business broker will work with the seller and buyer to review many documents. The main 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 the timing and how to process through the many steps to get to the point where the due diligence is close to completion, but it’s now time to open escrow; which is the process used when selling a business in California.
The escrow process is typically handled by a California licensed company and 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 of California state tax clearances such as sales tax and payroll clearances and other items that will be specific to the business and the industry it is in.
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. That’s why it’s essential to plan for this event 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 carry out the buying and selling a small business process in California.
You can also consult with Andrew Rogerson on how to increase your overall value.
You might want to read further the Six Steps to Successfully Sell or Exit your Medical Practice in California
Finally: Prepare an Exit Plan
While there are many other details you should be aware of when selling your small business, hiring a certified business broker like 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,” it might be time to contact Andrew Rogerson.