Time is of the essence when buying or selling a business in California.
Whether you are selling a business or buying a business, keep the process moving. Many factors can bog down the sale of a business. In fact, more than purchase price or structure, time is the most likely reason 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 the 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 the closing process usually takes from 30 to 90 days.
Here are 11 questions you don’t want to skip if you are considering selling your business in California.
So, how do you keep the sales process moving forward?
Attentive Intermediaries
Your business intermediary should be able to give you the time, attention, energy, and resources necessary to focus on your deal.
Be sure to ask your business broker or intermediary about their organization’s work on closing details. You want to be sure that you are working with someone who can cover minute details, looking weeks and months ahead in the sale process.
Obtaining appraisals, ordering environmental investigations, transferring licenses, title work, and many other details need to be handled correctly and in a timely fashion to be able to close a transaction. For optimal results, it is crucial to collaborate with someone who understands the proper sequence of events, thereby minimizing unnecessary delays. There’s a lot to coordinate, and missing just one detail can cause a delay in closing the deal.
Transition Specialists
From your business broker or intermediary to your attorney and accountant, consider hiring specialists in business transitions.
Inexperienced advisors tend to be overly conservative to protect their liability. This can drag out the negotiation process and may frustrate the parties involved. If you are serious about selling your business, you likely don’t have the time or money to pay for your advisors to educate themselves on the mergers and acquisitions process.
Comprehensive Overviews
Your advisor should spend time packaging the business upfront. A comprehensive business review can be developed that answers 80 to 90 percent of a potential buyer’s standard questions.
This helps both the buyer and the lender make decisions more quickly. It will also save you time because your intermediary won’t need to request information as new buyer questions arise.
Seller Preparation
Be prepared to move forward emotionally and financially. Sellers sometimes thwart the sale because they haven’t seriously considered their plans, or their financial expectations are unrealistic. A professional advisor should be honest about what they believe the market can bear and should not let you go to market with an unreasonable asking price.
Buyer Screening
Finally, your intermediary should screen all buyers to ensure they are serious about the potential acquisition and have the necessary financial means to proceed with a transaction. You don’t want to waste time with buyers who simply can’t afford a purchase.
Selling a business can be an emotionally charged experience. It’s a time to work with dealmakers and specialists who will help minimize the stress and facilitate a smooth transition toward the timely completion of the business sale.
Are you thinking about selling your business and moving on to your next challenge? Would you like to know the value of your business? For more information, please visit my website for business valuation services.
Andrew Rogerson is a certified business broker based in Sacramento, California. Call Toll-Free at (844) 414-9700. If you prefer, email him at support@rogersonbusinessservices.com. Andrew services the whole state of California.
This article is reprinted as a courtesy of the International Business Brokers Association® (IBBA). IBBA is the largest international, nonprofit association operating exclusively for the benefit of people and firms engaged in various aspects of business brokerage and mergers and acquisitions. IBBA® has 1,950 members worldwide.