Selling Your Business in
Today’s Tough Market
by Glen Cooper
Business Broker / Business Coach
Selling a business is complicated.
You can take control of the process,
however, by learning what to do.
I’ve been selling businesses for over
30 years. I’ve learned many lessons.
In this article, I will show you how to
make it happen.
I know how it SHOULD BE DONE.
I know how you WANT IT DONE.
I know how it REALLY GETS DONE!
Understanding these three aspects of the
process and bringing them into alignment
is the key to making it all work.
Over the years, I’ve written a lot on this
subject. The first time was in the early
1980’s when I started being a business
broker. Then, in the late 1990’s, I wrote
for a then-new website, BizBuySell.com.
Now, in 2012, I have just re-written this
content to bring it all up-to-date.
The subject can be broken down into five
Part 1. Today’s Market
Part 2. Six Steps of Selling
Part 3. Questions to Ask
a Business Broker
Part 4. Surprises You Can Expect
Part 5. After the Sale
The small business selling market across
most of the U.S. and Canada is similar
and my comments on the subject will
apply to most situations in both countries.
I am a student of historical trends and I
believe today is the most interesting
time in all of human history. Because of
a unique alignment of causal effects, it
is obviously a great time to buy or start
But oddly, it also happens to be a good
time to sell as well. In both cases, it is
time to get going. I never thought that
buying and selling could both be
favored at the same time, but I believe
that is exactly what is true right now.
Uncertainty creates opportunity. Times
like these create tomorrow’s business
legends. We are right in the midst of the
changes that will be tomorrow’s “best
thing that ever happened to us.”
It is unlike any previous time because:
Generational shifts are changing the
way businesses work,
A tough economy is causing a
worldwide power structure re-mix, and
Scientific and technological
breakthroughs are revolutionizing life
as we know it.
A retiring business owner in the United
States, (we’ll call him John) sells his
business because he has a unique
opportunity to move and start a whole
new life that he didn’t expect.
His business is bought by a young
couple who have been traveling
overseas for several years.
The whole thing is financed, without a
local bank or SBA guaranty, by a group
of third party equity capital investors,
with a strong down payment from the
buyer, and with the help of seller
financing that will actually save John
taxes on his business sale proceeds.
These buyers have found financing
through one of their former employers,
now involved in a venture capital fund
that organizes small investors on the
Internet into larger pools of investment
capital to buy businesses.
The young couple buying John’s
business is moving to his area for
economic, safety and family reasons.
They know how to take John’s business
to a completely different level better
than John does. They will create a new,
interactive, multi-lingual website for
selling John’s product and service
worldwide to a niche market.
John’s oldest daughter is a successful
executive in a biogenetics firm. She is
now quite well-off and is buying mom
and dad a separate home near her own.
John is relieved. He will now be free of
worry about workers or computers he
no longer understands.
Time to Get Going!
All of this is what I mean by
generational shifts and new
opportunities fueled by technology. It’s
truly a whole new business buying and
Business buyers have always been
younger than business sellers, but today,
it makes a bigger difference.
Generation Xers (and even GenY’s
now!) are changing how business is
done because they have new tools: new
analytic tools, new communications
tools and new collaborative tools.
Playing computer games all those years,
it turns out, had the potential of making
you an excellent global resource
manager. Who knew?
Current economic turmoil caused a dip
in the prices of some businesses. But,
surprise of surprises, even that low-tech
business now looks pretty good.
It looks good because it reliably serves a
steady, safe and friendly local
community. It looks good because it
offers a better return on investment than
elsewhere. It looks good because it
offers a great lifestyle.
Banks are expected to be back in the
business of small business lending
someday, but in the meantime, the
market is filling the vacuum in most
creative ways. Private funds are coming
out for the right deals. At the small
business level, however, that’s mostly
Some of today’s “right deals” are brand
new businesses founded on new
technologies. But just as many are older
businesses given new life with that
same new technology. Targeting niche
markets has never been easier.
If there are as few as only 1,000 people
worldwide that want something, that
small number of people can be a great
business market for someone who sees
their unique need. Technology is also
creating unique needs.
Every time I travel around the U.S., I
remember why people buy businesses
here: if they do, they get to live here!
Almost anywhere in the U.S. is a great
place to buy a business. The United
States is as physically, socially,
politically and economically safe as
anywhere else on earth! It’s also mostly
a 4-season climate and an environment
of great beauty, offering many different
Other places in the world may be shaky,
but things still work here. Our economic
infrastructure is known to be one of the
best in the world. Who wouldn’t want
what we have?
Six Steps of
Selling a Business
Selling a business can be broken down
into six steps:
1) Form Your Team – Business
Broker, CPA, Lawyer, Wealth
2) Price It Right – Don’t Forget that
Terms are Everything
3) Prepare a Package – Do Your
4) Target Prospects – Tell Only the
Right Types of Prospects
5) Negotiate Professionally – Use
6) Wrap It Up Quickly – Get to the
Closing on Time
Let’s look at an example. It’s an old
favorite of mine because it illustrates all
the points and the seller gave us
permission to use this story.
The first decade of the 21st
receding into history now, of course. But
among the most extraordinary things I
have learned is that this 2001 story and
the many problems that one seller
encountered back then continue to repeat
themselves endlessly – over and over
again! The technology of how it’s done
The basic human stuff remains the same.
Inc, a well-known small business
magazine, featured an exposé (Nov.
2001) about a national broker's dealings
with business owner Cal Brown and his
prolonged effort to sell his business, a
fencing materials manufacturing and
The long saga of failed expectations
eventually ended in 2003 with a
successful sale (through my firm, of
course), but only after Cal fired the
national broker, consulted with his
advisors, then hired me to value, list,
market and sell his business.
What happened is as interesting as it is
The failures of the national broker offer
interesting examples of what doesn't
work and what a business seller should
not do. And, by the way, the same
national broker is still out there doing
exactly the same thing, despite lawsuits
and a lot of bad publicity.
The marketing strategies, techniques
and activities of any high-quality
business brokerage firm provide
instructive lessons of 'how it's done.'
When Cal decided to sell his $2 million
fence-building business, he did what
many business owners have done. He
responded to a general marketing offer
from a national business brokerage and
appraisal firm to appraise his business.
After they completed their valuation, he
met with a sales representative of the
national firm and listed his business
The national company placed a high
price on the business, documented by a
28-page report. They promised a
national advertising campaign. They
promised that their large national staff
would produce solid results. He
believed them because their
presentation seemed polished and
Like nearly all sellers, Cal had never
sold a business before. He liked the idea
of hiring a national broker to make up
for his own inexperience. Most of all, he
liked the price they said he could
Cal has since learned that he missed a
few steps. If you talk to him today, he
will gladly tell you some lessons he's
Form Your Team
It all starts with teamwork. Cal needed
to form his team of professionals, and
then listen to them. But, like many
business sellers, he didn't take this
critical first step.
"I am used to making my own
independent decisions," says Cal. "I
consult with my wife, of course, but I
have never had to assemble a team of
outside professionals. For most
decisions, I wouldn't. In this case, I
Your team can include a business
broker, lawyer, accountant and any
other personal business advisor you rely
upon. This team provides checks and
balances to help you keep the process
on track. Your team members may have
to be from your area’s largest city, but
rarely need to be farther away than that.
Every urban area in the U.S. has many
such good advisors.
Technology will eventually make it
practical and affordable to assemble
advisors from around the world that you
know you can trust. But today, forming
your team is most likely a local activity.
You want to be able to talk face-to-face
with each of them.
Price It Right
The first team task is to value the
business. Pricing your business,
however, may be more difficult than
you expect. Your accountant and
attorney may not have valuation
expertise. None of your team members
will want to appear too pessimistic
about the price of your business.
This is a time for active listening. If
your team agrees upon the price and
terms, that's great. If they don't, look for
suggestions from the team on ways to
resolve the issue.
"It is a mistake to accept a quick price
estimate and not check it out with other
sources," says Cal. "Frankly, I was
thinking of getting rich quick.
"I have learned, sadly, that it is a
common technique of national brokers
to price a business very high, take a
large cash retainer, and then effectively
disappear. It's still hard for me to
believe that this happened to me.
"When I finally consulted with Glen’s
firm, and then compared what they said
about my business value to what others
were telling me, I discovered a wide
agreement at a lower price range. It was
a real learning experience for me.
"I didn't want to hear it, but it was a
realistic price and terms combination
that finally helped to get my business
sold. The biggest disservice that a
broker can do is to vastly overprice your
Prepare a Package
Buyer prospects expect a great deal of
information. This means you should
develop a sales presentation package to
summarize your business story and
supporting data. This is the broker's job,
but you may choose to have it reviewed
by your other advisors before it is given
to any potential buyers.
Prospects expect you to present a
thorough explanation of your business
and the markets it serves, as well as
historic and current financial statements.
"The valuation report prepared for me
by the national broker had no value."
"The professional sales package
assembled by Glen was superb. It laid
out the story of my business. It showed
how the numbers worked. It pointed the
buyer in the right direction."
A sales presentation package,
sometimes called an "offering
summary," an “offering memorandum,”
a "prospectus," or “confidential business
review,” is ideally prepared by the
broker and reviewed by you, the seller.
It is critical for both of you to have a
mutual understanding of the facts and
issues. Creating the package prepares
each of you for the required sales effort.
"The national broker provided the
names of only four prospects," says Cal.
"When I called to follow-up, I couldn't
reach one, and the other three weren't
remotely interested in my business.
“They were not real prospects for my
business. They should have been
Finding the right buyer is the broker's
job. Working with a well-managed
database of prospects is how effective
business brokers get the job done.
Qualified, serious buyer prospects
(companies and individuals) register
with business brokers in geographic
areas where they expect to find business
The national broker's promise that its
database is larger is meaningless if
those buyers aren't the right buyers for
your geographic region, your industry
or your size business.
Cal Brown's national broker boasted of
having 17,000 buyer prospects, yet
identified only four. My firm then
maintained a buyer database 1/10th that
size, but found 43.
Targeting and qualifying prospective
buyers is a painstaking process.
Maintaining lists and working with
prospects is critical.
An amazing thing to learn for a seller is
that buyer prospects who are prepared
and capable of actually buying a
business are usually already looking.
Most are already working with a broker.
If someone hasn’t yet taken steps to
search for a business to buy, they are
probably still months or years from
actually scraping together the money,
courage and information needed to take
Curiosity and uncertainty usually
require that business buyer prospects
will take many early, yet very slow,
steps toward that decision. For most, it’s
something they’ve never done before.
The learning curve is longer than
anyone thinks at the beginning of their
Business brokers who work every day
with self-identified buyer prospects
know that 95% or more never move
ahead to actually buy a business.
Of the small number that does, it
usually takes a year or so of active
searching and learning about the process
before they settle into a purchase
That’s why hiring a broker who already
has buyer prospects in the pipeline
makes sense. They may be ready to buy
sooner rather than later. Catching a
buyer at the end of their search is best.
When you finally get an interested and
qualified prospect that you believe is
right for your business, plan your
negotiation strategy carefully, but
always negotiate in good faith.
Remember that your goal is to sell your
Lay the foundation for the team effort
that you and the buyer will need to get
to a closing (sale completion), and then
to have a successful transition in the
months that follow. Cal Brown was
exemplary in following this advice.
“Glen’s whole team,” says Cal, "was
right there at every turn - on the phone,
in my email, at my home or meeting
with the prospective buyers in their
“I needed their advice on a number of
points during the long negotiation. I
never had to wait to hear from them.
They were always accessible and
Over 13 months, we identified over 80
potential prospects for Cal's business.
Of those, 43 were qualified and
interested enough to receive an offering
summary. Only 5, however, pursued it
further. In the end, the offer accepted
was from a highly skilled buyer that Cal
believed would be an excellent fit for
Those ratios – 100% of the inquiries
leading to a 50% response rate, then less
than 10% who actually move forward to
serious consideration , finally yielding
1% who actually buy– are typical for
how the process really works.
As the old saying goes, “You have to
kiss a lot of frogs to find a prince.”
Business brokers kiss a lot of frogs for
Wrap It Up Quickly
"After we received a solid offer from
my preferred buyer, I also had another
good prospect who wanted a showing,"
"Glen helped me decide how to proceed
so I wouldn't offend either one.
“Even after the offer was accepted, Glen
managed to keep the business on the
market, so we didn't lose other prospects
or miss any new ones. But he also
helped me to keep the process moving
Even the best buyer prospects can
change their minds overnight.
When someone is ready to make a
commitment, my advice is to get it in
writing and get a deposit.
After the initial agreement is signed,
close as quickly as possible.
Cal's business was sold using the
services of experienced local
professionals on each side. He and his
wife, Gale, are now retired.
Questions to Ask
A Business Broker
In these very turbulent times, we all
need to decide: do I want to continue
my business, or do I want to sell? If I
plan to sell within the next few years, is
there anything I should do right now?
Who do I call? Which business broker?
Who else needs to know? Where do I
begin? For most prospective business
sellers, this business selling exercise is a
confusing, first-time experience.
It is wise to begin slowly as you form
your team. Interviewing a business
broker might be the best start. Business
brokers don't charge by the hour, so it
costs nothing to get their initial advice
first. A one-hour meeting can be very
With Your Broker
At your first interview, we business
brokers expect you to ask us what your
business is worth. We may offer a
quick, free estimate of your potential
business value if we can review the last
few years of tax returns or financial
Not all business brokers will do this free
of charge. Not all businesses can be
valued so quickly, even by a pro.
Sometimes it takes 15 minutes.
Sometimes it takes 15 hours! If it takes
more than a few minutes, I will charge.
A broker who has no business appraisal
background may recommend a third
Confidentiality is important and
business brokers understand this. The
material you give to business brokers is
treated as highly confidential.
Your business broker will have many
more detailed analytical questions about
your business when you commit to
proceed with a sales offering.
Business brokers expect you to ask lots
of questions about the process. How
much time does it take to sell a
business? What steps are involved?
How does a business broker solicit
potential buyers and still preserve
A business broker is the advisor you
will spend the most time with when you
finally decide to sell.
Your business broker must be an
experienced financial analyst, a skilled
business valuator, an effective planner,
a savvy sales professional and a
The individual you choose will be the
primary actor in your sales effort.
Even in a larger firm with multiple
business brokers, any given business for
sale usually only commands the time
investment of one individual broker.
Some brokers have adopted a
collaborative approach, with at least two
brokers involved in each business sale,
but that is the exception in the world of
business brokers, not the rule.
Finally, check out your business broker.
All business brokers will agree to come
to your business first, but you may want
to reverse that order. There will be time
in a second meeting for your business
broker to come see your business.
At the very least, meet the business
broker in a space where you can get to
know him or her as a person.
Meet for a meal, go to the broker’s
office or home, welcome the broker to
yours – whatever it takes to verify that
the person you are choosing for your
broker is a person who will wear well
with you over time.
Looking at the broker’s website is very
important. Looking for them on the
Internet personally is a good idea.
Getting referrals from your other
advisors is a great idea. But, after you
narrow the list to a few that seem likely,
start with the one you think is the best,
and see that broker first.
Six Questions Suggested
by Inc Magazine
Many people have suggested questions
to ask a business broker at the first
meeting. A great list of six questions
comes from Inc. magazine writer
1 What is your background and
experience? Matthews quotes
prominent Texas business broker Jeff
Jones as pointing out that the average
business broker is 55 years old, and for
good reason. Experience counts!
"It takes time," Jones says, "to
understand the nuances of business. A
competent broker needs to know about
valuation, accounting, law, sales and . . .
Don't be shy about asking your broker
what experience they have in these
2 Are you a member of a
professional association? Matthews
points out that business brokers should
have the right connections.
Business brokers have a professional
association, the International Business
Brokers Association (IBBA). Most
serious business brokerage firms are
3 What services do you provide?
Matthews urges sellers to carefully
review the services offered by various
Two mistakes often made are equating
business brokers with real estate
brokers, and over-estimating
capabilities of so-called "national
business brokers" in comparison with
local ones. Real estate and business
brokers are not the same.
Real estate brokers don't have systems
to protect a business seller's
confidentiality. They often represent
buyers, which complicates a business
sale. They rarely understand the
nuances of a business sale, especially
intangible business values.
A skilled local business broker can also
offer much better service than the
current crop of "national brokers."
Many, if not most, of today's business
brokers who claim to be national are, in
fact, merely producers of seminars and
webinars intended to solicit high fees
and retainers, with very few actual
business sales. The marketing material
they produce for themselves is great.
The materials and services they offer
specific businesses - when they offer
any services at all - are shamefully bad.
A seller should be able to get specific
answers from a competent business
broker. When in doubt, check references
before agreeing to list your business.
4 Can I talk to the owner? Given
the average size of business brokerage
firms, this is not as hard as you might
think. As many as 45% of business
brokers are sole practitioners.
Most business brokerage "firms" have
only 2 agents. As Carole points out in
her article, the danger posed by
unscrupulous national brokers is large
enough for her to make this a major
point in her advice.
Your small local brokerage firm, well-
connected locally and on the Internet, is
all you usually need. There are a few
exceptions, but not many.
In the world of selling businesses,
therefore, this question only concerns
the larger “national” firms. These
"national brokers" tend to be major
cities on the U.S. east and west coasts
and in Texas. We would guess that you
won't be able to find the "owners" of
IBBA founder Tom West is right when
he gives the advice in the Inc article to
"cross that firm off your list," if you
can't talk to the owner.
Every legitimate business brokerage
firm in the country has an owner who is
actively engaged in the field and who
will talk directly to any potential client.
It might even be best to go meet them in
5 How do you screen and pre-qualify
buyers? The Internet has recently made
the world a much smaller and more
dangerous place for business sellers.
The difficult part is not how to get
buyer prospects to respond, but how to
manage them after they do.
Managing "buyer flow" to protect a
seller's confidentiality requires a system.
Sellers need to know whom they are
dealing with. Prospects need to be
screened and pre-qualified.
When a buyer prospect is
uncooperative, brokers need to have the
procedures in place to stop the process
until the proper information is obtained.
Fewer than 5 in 100 business buyer
inquirers who respond to your
marketing effort will ever actually buy a
business! That means, on average, to get
one real buyer, you and your broker
need to eliminate at least 95 others! This
is why it takes a system.
6 How will you market my business?
At your first meeting with any business
broker, you can feel comfortable asking
for details about how they work.
The business broker you want will have
printed or Internet referenced materials
that explain this as well as samples of
past business sales or endorsements and
"Discovering what tools a firm has in its
marketing arsenal will help you
determine just how committed they are
to selling," according to Matthews.
There are at least five things you
probably don’t know about selling your
business that will surprise you:
The price and terms you start
with won’t be what you end with.
You are the one most likely to
breach your own confidentiality.
You have only a 20% chance to
sell your business in the first year.
You have only a 5% chance to sell
to any one buyer prospect.
Money should be the least of your
worries during this process.
How can I prove these statements?
Well, I can’t PROVE them.
You see, in private business
transactions, no one has an interest in
keeping records of failures, problems,
surprises, worries and embarrassments.
Private and public business sale records
are only about successful transactions.
Sales get recorded, but not businesses
that fail to sell.
Problems, surprises and worries that
have been experienced by those before
you rarely get passed along. What’s
embarrassing is conveniently forgotten.
The only way you can take the pain out
of these and other surprises is by talking
to those of us who have practiced long
enough to help you avoid them, or at
least minimize their impact.
What you need is a professional from a
firm with effective systems, experienced
team members and a good track record.
The team (business broker, business
lawyer, CPA, financial advisor and the
firms behind them) should have the
combined skills to correctly estimate
and defend the value of your business,
to protect your confidentiality, create
top quality marketing materials, screen
and qualify both personal and corporate
buyer prospects, and get you through
speedy negotiations to a satisfactory
closing and then beyond to whatever
future you have planned.
Neither I, nor anyone else, can make
any money by gathering and publishing
information about things you don’t
really want to know or about costly
surprises that await you. No one wants
to pay for bad news.
But, we business brokers are at our
professional “best” when we tell you the
truth, and when we collaborate with you
by being transparent and accessible.
So, with that in mind, here are my
explanations of “5 surprises for business
The Starting Price & Terms
Won't Be the Ending Price
The price that your business can
command on the market is actually
more predictable today than ever before,
but that is entirely counter-intuitive.
You would think that market data points
from pre-2008 are completely wrong.
Well, the values ARE DOWN because
profits are down, but the pricing
multiples based upon profit for small
businesses that are doing okay are pretty
stable. The market is just a lot less
forgiving. There is much less room for
The information of what businesses sell
for at all size levels is much better than
it used to be, but sellers are still largely
unaware – or in denial – about the
realities of price and terms. The current
economic turbulence is only reinforcing
the principals of business valuation,
Almost everyone is baffled by the
business appraisal process because it is
both science and art. Rules of thumb
offered by brokers, in trade journals and
online are often confusing, sometimes
even wrong, and nearly always
misunderstood by general readers.
There are, however, several online
databases now, with over 75,000
business sale transactions showing what
businesses sell for.
In aggregate, they show that most owner
operated businesses sell from as little as
1 times annual “cash flow to the owner”
to as much as 4 times cash flow. But
beware! The average business in this
category sells for only about 2.2 times
cash flow to the owner, not including
real estate and inventory for resale. That
has not changed for years.
Sellers don’t seek out this data, but
buyer prospects do.
In a brief blog or article, I cannot teach
business appraisal. I have written
extensively about this already, and will
write more as new data comes in.
The topic is also covered in the “Buying
A Business” seminar I offer. I also teach
an all-day course for the International
Business Brokers Association, IBBA,
on “Pricing the Small Business,” one of
two day-long business valuation courses
The most common rule of thumb used to
estimate what a small business will sell
for (of the kind and type we would have
as a client of ours) is about three times
annual owner cash flow. The businesses
that I sell are often larger or “better than
average” businesses, so the multiple of
cash flow can occasionally be more.
If you are surprised by that 3 multiple,
it’s probably because what you read is
usually about larger companies.
In that case, you’ve probably heard a
figure like 5-7 times earnings, or, in
public companies, P/E (Price/Earnings)
ratios of twenty times earnings, or even
Keep in mind that, in business, among
many other factors, size matters! The
ways that earnings are measured change
too, as a business gets larger.
Annual cash flow to the owner (a.k.a.
Seller’s Discretionary Earnings - SDE)
is used for deriving rules of thumb for
most small businesses.
This cash flow, or SDE, is calculated
differently than EBITDA (Earnings
Before Interest, Taxes, Depreciation and
Amortization) used for mid-market
businesses that are professionally
managed, but still privately owned.
EBITDA is completely different, too,
from “Net After-Tax Profit” used in the
world of public entities. When you
review public company comparisons,
for example, you deal with completely
different P/E (price-to-earnings) ratios.
Don’t get confused. Take time to
understand the terminology differences
and which ones apply to your firm.
If your firm is owner-operated, that
usually means you’re in the small
business category, regardless of sales.
That tends to define the way your
business is run, how you keep records,
and who will want to buy what you
Loan availability is also different for
smaller business sales.
Banks don’t like to lend to
inexperienced buyers buying a small
business. Banks are resistant to lending
to buyers that lack experience in the
specific type of business they are
buying and/or in the market served by
Corporate acquisition groups will
usually make offers only for the biggest
niche players, and some of these groups,
too, are not experienced enough in the
eyes of third party lenders.
Most sellers of small businesses must
“seller finance” in order to sell.
The good news, however, is that seller
financing can get you a better price, a
more certain transaction and helps
minimize tax consequences. Playing
banker actually can be profitable.
So, don’t be too discouraged by what
you hear and read! But, do expect to be
Business pricing is confusing and
surprising for both sellers and buyers.
Remain open minded as you ask around
and talk to your team of advisors.
You Are the One Most
Likely to Breach
Your Own Confidentiality
Your biggest concern is – and should be
– the potential breach of your
confidentiality. When a business is for
sale, you DON’T usually want the whole
world to know about it.
The sad truth, however, is that you will
likely be the guilty one that breaches
your own confidentiality. Without
receiving training on how to avoid this,
you will likely be the one to tell your
relatives and confidants. They, in turn,
with tell others. Your secret will be out.
Particularly if you try to sell it yourself,
confidentiality has probably been
The ways to mitigate this are to see
professionals early-on and strategize
about maintaining your confidentiality.
A confidential sales effort is best.
You don’t want your employees to ride a
roller coaster of fear. You don’t want
your creditors or vendors to pull the rug
from under you. You don’t want
competitors to use it against you. You
don’t want your time wasted by curiosity
seekers who think they’re potential
buyers, but really aren’t. You don’t want
to be approached by relatives at the
family outing to ask if you’ve sold yet.
All that being said, however, I can report
to you that even a simple confidentiality
effort usually does the job.
Most brokers, lawyers and accountants
are good at keeping things confidential.
Today’s buyer prospects are asked to
sign confidentiality agreements (a.k.a.
non-disclosure agreements) as a standard
Only 20% Sell in Year 1
The odds of actually selling your
business within the first year are only
about 20%. But, the more unique your
business appears to be, the less
predictable that percentage is. Economic
turbulence does not seem to affect this.
A profitable business, serving a unique
specialty market, with a great physical
location, and represented by a skilled
team of professionals working for the
seller, can sell quickly. The same
business, without a profit, in a bad
location, and not represented
professionally, can take years to sell, or
can just fail to sell.
I have been a business broker now for
over 30 years. And, among my current
colleagues and associates in three
different states (Maine, New Hampshire
and Colorado), we have well over 200
years in combined business brokerage
Considering the data that we know
about in our markets, it would be a fair
statement to say that – all combined –
only 20% of businesses in those markets
put up for sale by brokers and/or for-
sale-by-owners will sell within the first
year of the sales effort.
The biggest reason is that sellers are not
realistic on the price and terms. A
second major reason is that they are not
properly prepared when the first (and
sometimes best) potential buyer shows
up. Buyers are better informed and more
demanding of information than ever
before. Overpriced and poorly
documented business-for-sale offerings
drive buyers away.
Hiring, then listening to and following
the advice of your own professional
team of business advisors will improve
Only 2% to 5% of Buyer
Using the same sources of data – and
we actually have much better data on
buyer prospects – only 2% to 5% of all
people who make contact with a broker
or seller to buy a business will ever finish
the process! These figures vary by
market and by broker, but the percentage
is nearly always within this range.
There are, of course, stages of buyer
involvement – stages where the odds
improve. If the buyer prospect signs a
non-disclosure agreement and offers
appropriate financial disclosures, then the
odds go up – but only to about 5%. After
a first face-to-face meeting with the
seller, the odds double again – to 10%.
In subsequent contacts, the odds
gradually increase until they hit a new
peak at the time the business seller and
buyer reach agreement in principle on
price and terms – it’s now about 50%.
With financing approval, it probably
jumps to 80%. When the check has
cleared the seller’s bank, only then is it
These odds also apply to the seller’s
adult child or key employee. Child and
key employee familiarity with the
business would seem to increase the
chances they will buy, but that is offset
by their familiarity with the problems,
which decreases the odds they’ll buy.
Both the owners’ children and key
employees usually rate low on financial
ability and/or the willingness to pay a
market price. The more they see
themselves as owners already, the less
they want to pay a fair market value for
the business. There is almost always –
among the owners’ children and key
employees – a feeling of entitlement.
Money Is the Least
of Your Worries!
Yes, that’s easy for ME to say about
your sale. It’s not MY money! Although
I did sell my business brokerage firm in
Maine after 29 years in 2010 – and it
WAS my money!
So, I not only have watched several
hundred others go through this process,
but I actually went through it myself in
May 2010 before I moved back to my
home state of Colorado.
But, truly, I have some advice to give
Our goal as your team of advisors –
whether we are brokers, lawyers,
accountants, financial advisors or even
lenders – is to get you the best deal we
can. Sometimes, it’s just a money
equation. You want it. Our charge is to
get it. Simple enough.
On the other hand, most of our business
seller clients are going to run out of
time before they run out of money.
This is a profound reality that you need
to think about.
A leading business guru – Michael
Gerber of “The E-Myth” fame – argues
that you need to run your business with
the primary aim of giving yourself more
life. My advice to you is to run your
business sale process with that same
Your business may have a mission of
producing a great product or offering a
wonderful service, but the primary aim
– the reason you started or bought it in
the first place – was to give you more
Making quality widgets and taking care
of customers is a noble thing, but you
need, want and deserve a better life if
you’re going to go through all of this
effort to own and run a business.
As you sell your business, don’t lose
sight of this. This is not the time to fight
over pennies with a buyer, prove you’re
right about something, or try to prove
you can “stick it” to the government. If
you are still up for those struggles, why
are you selling your business?
Your time is running out. This is NOT a
game. This is your LIFE going by.
So, what’s the surprise here? If you hire
me or another firm I am associated with
– and we accept the assignment – we’ll
be your agent and do whatever you want
that’s legal. But, not before we tell you
You want a professional that will give
you solid advice on price and terms
before you ever enter the market. You
should seek out a professional that has
systems in place to preserve the
confidentiality of your transaction. You
need a professional advisor that
thoroughly understands the market of
buying and selling businesses.
You deserve a professional advisor that
will tell you your odds about when to
hold and when to fold.
Most of all, however, you need a
professional – actually a whole team of
professionals – who are wise enough to
help you to get to the other side of your
business sale, where there is, in fact,
more life waiting for you.
After the Sale
After you go through all the steps of
selling your business, and it’s finally
sold, what will you do next?
I have a unique suggestion. Don’t
retire. Start over!
Corollary: If you don’t know what
you’re going to do to start over, don’t
sell until you have a strategy for
Since you already know something
about running an enterprise, perhaps it
would be best to start the next phase of
your life with the intent that it will be
your most successful enterprise ever.
Since you are going to miss running an
enterprise after you get a good night’s
sleep, why not make your “retirement”
Take all you know about running a
business and apply it to the rest of your
Ideas and an Action Plan
So, how best can you apply your
business knowledge to make the rest of
your life better?
In as few words as I can, I give you this
checklist of ideas:
Make time. Prioritize your future
time based upon YOUR priorities.
Lessen your stress. Pay attention to
how the other mammals do it!
Budget for lots of profits – and not
just the money kind.
Go for work/life balance. Do the
work you love and love the life you
Based upon those ideas, here is my
universally recommended action plan:
1) Search and Discover. Get
mentally engaged in something you
like. Search the areas that interest you.
Discover what you haven’t had time for
before. Get a hobby. Search the Internet,
read the blogs, the articles, the
discussions and some good books, listen
to relevant audios and view the right
videos. Learn all you can – in every way
you can – about what you think you
want to know more about.
2) Envision and Dream. Envision
what you want for yourself. Dream
about what could be. Decide what’s
next in your life. Write down some
goals and objectives – just like you did
in business. Think big. Think very big!
Ask yourself how your world can be
made better. Adopt a cause that makes
your world better.
3) Focus and Create. Focus on
something. Experiment to give yourself
a “quick win.” Try to create something.
Find an immediate outlet for your
energy today. Get physical. Do
something you know you’d like to do.
More importantly, choose to do
something that you know you CAN do!
4) Share and Support. Share your
“quick win” experiment with someone
else. Get feedback. Get support. If the
feedback is negative, seek another’s
support. Reconsider if needed, but make
sure that you are reaching out to others.
Offer support, as well, to anyone else
who is taking this type of risk to share
with you. Be a part of building a
community – whether it is two people or
1,000 – gracefully giving support and
constructive feedback to each other.
5) Plan and Control. Build upon
your initial experiment. This time,
however, focus on both short-term and
long-term consequences. Review those
goals and objectives again. Add some
strategic and tactical plans, perhaps.
Although we cannot control others, we
can control what we plan. Everyone is
different, however. Plan the way you
want to plan to establish whatever level
of control over yourself that you want
6) Do and Engage. Work your plans.
After you have taken the needed pause
to plan, start running in the direction of
Go fight the good fight. Volunteer for
the front lines of your own battles.
In business, a great boss leads
colleagues by demonstrating, “This is
the way we do it here. This is the way
we change it here.” Now, in your
personal life, lead yourself. Choose the
way you will do it and change it that is
custom made for you.
Where did I get such crazy ideas?
Well, without elaborating, I stole them,
expanded and re-ordered, mostly from
Stanford neurobiologist Robert
In writings and talks that he has been
authoring for years, he shares in various
results of his experiments in mammalian
Do What the Other
If you will notice, my 6 steps are
really stress management steps based
upon what all mammals do:
As we mammals search, hunt and
discover, we engage our minds and
bodies. This reduces stress. Mental and
physical engagement reduces stress.
As we see opportunity (for a good meal
or sex – these two categories are the
same for all mammals!) we envision
and dream. This reduces stress in
anticipation of the experience ahead.
Humans can also do this with other
opportunities. Thinking the future can
be better reduces stress.
As we experiment with certain
behaviors, if we achieve immediate
successes, this reduces stress. Our
brains are much better at predicting
future outcomes than most mammals,
however, so that’s why I suggest that
we actually plan for these “quick wins”
to reduce our stress. Predictability of
results reduces stress.
As we care for each other, share our
space with others, and build community,
this reduces stress. Feeling a part of
something bigger than ourselves
reduces stress. Receiving support and
being touched reduces stress. Feeling
safe in someone’s arms reduces stress.
As we mammals plan the hunt, the
campaign, the next collaborative move,
we reduce our stress. A sense of control
Finally, as we actively flee or fight (the
well known “flight or fight” response),
we engage all of our mind and body
parts at once. In other mammals, this is
automatic and turns off as quickly as it
turns on. When it does NOT turn off, as
it doesn’t yet in humans, it kills us.
Our stress-related diseases (and there
are many!), usually kill us slowly, but
they really are the cause of most early
human deaths. We have not yet evolved
genetically to cope with the stresses of
the lives we have created for ourselves.
Because of our larger brains, we worry.
That keeps the blood pressure and
muscle tension high and gives us no
For we humans, the trick is to use that
large brain we have to consciously
search and discover, envision and
dream, focus and create, share and
support, plan and control, do and
We do this to use our minds and bodies
in activities that reduce stress. We
exercise our talents to make the future
better and more predictable. We can
consciously build relationships with
others that are mutually respectful,
nurturing and celebratory. We can plan
and take control.
Make This Next Year
As you seek to sell your business, keep
up with today’s market. In some ways,
it’s always in balance between supply
and demand. In other ways, however, it
seems to change every day!
Pay attention to the basic business
selling steps – build your team, price it
right, prepare for the sale carefully and
develop your sales package carefully.
Get that team of yours – your broker,
lawyer, CPA and financial advisor – to
help you target your prospects, handle
negotiations professionally, and get to
the closing on time.
Learn the questions you should be
asking these folks. Ask the questions.
Don’t be surprised now with the
surprises I’ve already told you about
Finally, take all those years you have
accumulated – with all those lessons
and understandings – and invest them
now in the future to make this next year
– and all of your future years – the best
they can be!
About Author Glen Cooper
Glen Cooper is an active Denver-based business broker, business coach
and public speaker.
In 2010, Glen sold the business brokerage and advisory firm he co-
founded and ran for 29 years, and moved back to his home state of
Colorado. He operates his own business brokerage and coaching firm
His website is www.GlenCooperColorado.com.
Glen offers one-on-one coaching, seminars, webinars, workshops and keynote speeches on a wide variety
of topics related to small business value drivers, predicting future business trends, creating work/life
balance, self-coaching and social networking.
In his keynote speeches, seminars, webinars, workshops and one-on-one coaching, Glen coaches business
owners and the professional service providers who help small business owners.
He revels in teaching and speaking about what he knows and continues to learn – available to, and
appropriate for, any business audience – combining his instinctive humor, storytelling ability and the
”street smarts” of any salesman who has survived for thirty years on commissions!
Born and raised in Colorado, he never-the-less ventured to New England and, in 1981, co-founded what
became Maine’s largest business brokerage firm. He sold his company in 2010, returned to his home
state, and now lives in Denver.
Glen is an active member of many organizations, including the Denver chapter of the Association for
Corporate Growth (ACG), the Denver chapter of the International Coach Federation (ICF), the Colorado
Association of Business Intermediaries (CABI), and the World Future Society (WFS).
Glen is a Certified Business Intermediary (CBI), a designation awarded by the International Business
Brokers Association (IBBA). Glen is also a former Certified Business Appraiser (CBA) and a Business
Valuator Accredited for Litigation (BVAL), designations of the Institute of Business Appraisers (IBA).
Glen is a sought-after senior instructor and workshop presenter for the IBBA and its regional affiliates,
and was named a "Fellow of the IBBA” in honor of his service to this professional association in 2009.
Glen remains active as a “virtual” senior advisor of Maine Business Brokers, its strategic partner firm,
New Hampshire Business Sales, as well as several other intermediary firms throughout the United States.
Contact: Glen J. Cooper