Successfully reported this slideshow.
We use your LinkedIn profile and activity data to personalize ads and to show you more relevant ads. You can change your ad preferences anytime.

How To Sell Your Business FAQ

55 views

Published on

Are you thinking about selling your business, here are the answers to your questions. Even if your business is in distress this will guide you through the process.

Published in: Business
  • Be the first to comment

  • Be the first to like this

How To Sell Your Business FAQ

  1. 1. FREQUENTLY ASKED QUESTIONS ABOUT SELLING YOUR BUSINESS BRETTPITTSENBARGAR CEO – GROWTH POINT HOLDINGS
  2. 2. SELLING YOUR SMALL BUSINESS CAN BE A TEDIOUS PROCESS. Clueless owners who want to transition the business ownership cannot press on when baffled with questions on how to begin, what advice to heed, and where to seek support. Here are the answers to the most frequently asked questions about selling your small business. 2
  3. 3. WHAT’S THE FIRST THING I NEED TO PREPARE BEFORE SEEKING A BUYER?
  4. 4. WHAT’S THE FIRST THING I NEED TO PREPARE BEFORE SEEKING A BUYER? It’s difficult to close a deal when your business financial situation is plagued by debt. While it is still considered a necessary part of running your business because it covers startup costs, new equipment and additional staff, too much debt, however, can lead to cash flow problems. In fact, poor cash flow management was considered the top reason for 82 percent of business failures in the United States in a research study by an independent debt counseling organization. 4
  5. 5. WHAT’S THE FIRST THING I NEED TO PREPARE BEFORE SEEKING A BUYER? 5 If your business spending still exceeds your revenue at the time that you put your small business in the market, it’s time to take steps to dig it out of financial liabilities. You may sell your assets, find a cheaper commercial area to rent, convert variable loans to fixed terms, or simply cut costs that are eating up your earnings. Your business will most likely be sold at a bargain with high debt attached to it. If a willing buyer is able to pay at a higher price, however, they can look forward to turning around the enterprise in the hopes of using the profits to pay off the debt. One thing’s for sure: your business debt will affect the purchase price of the enterprise.
  6. 6. WHAT DOCUMENTS ARE NEEDED TO SELL MY SMALL BUSINESS?
  7. 7. WHAT DOCUMENTS ARE NEEDED TO SELL MY SMALL BUSINESS? 7 Buyers would initially ask you to present the following: � Income Statement � Balance Sheet � Cash Flow Statement � Tax Returns (at least two years) � Presentation Deck
  8. 8. 8 Since you’re just getting-to-know-you stage with a prospect, do not give away too much information by only sharing these documents to maintain confidentiality. However, when due diligence begins, you need to present the following aside from the five documents listed before:  Business Licenses  Proof of Business Ownership  Sales & Lease Contracts  Payroll Summaries for at least the Current Year  Any Existing Loan Documentations  Outstanding Accounts Payable & Receivables  Records of Chargebacks  Some would also require you to present a business continuity plan WHAT DOCUMENTS ARE NEEDED TO SELL MY SMALL BUSINESS?
  9. 9. WHEN IS A GOOD TIME TO SELL MY BUSINESS?
  10. 10. 10 Market conditions will always be influential in the success of your business sale. If the economy is in the doldrums and yours is not recession-proof, it may be wiser to wait for the meantime. However, there are savvy investors who are on the hunt for businesses in this kind of economy because they can snap up bargain deals. Ideally, you should sell your business at its peak. Buyers would be attracted at the prospect of having good returns without worrying on how to revive the enterprise's financial performance. WHEN IS A GOOD TIME TO SELL MY SMALL BUSINESS?
  11. 11. HOW MUCH DOES IT COST TO SELL A SMALL BUSINESS?
  12. 12. 12 Small business owners are surprised to find out that aside from paying a hefty fee to their business broker (which could range from 10 percent to as high as 13 percent!), they’d still have to pay legal fees (billed hourly), accountant’s fees, transfer taxes and transfer fees (when applicable). If you have an outstanding business loan, you’d most likely be paying a prepayment penalty too. Look into each aspect of your business and consult the people you’ll be working with to help uncover all costs. HOW MUCH DOES IT COST TO SELL A SMALL BUSINESS?
  13. 13. HOW LONG WILL IT TAKE TO SELL MY SMALL BUSINESS?
  14. 14. 14 It’s fairly normal to feel the urge to close a deal at the shortest time possible. You may be selling your business because of an immediate financial expense, you want to venture into new opportunities, you’ve suffered too much from nosediving revenues, you’ve had enough of disputing with your partner, or you’ve simply been overwhelmed by the responsibility of running the day-to-day affairs. Whatever your reason is, you want to have the shortest days on the market (the length of time that a business is on the market) as much as possible. HOW LONG WILL IT TAKE TO SELL MY SMALL BUSINESS? However, it’s easier said than done. Your patience will be tested, especially in tough economic times when securing credit to finance a business purchase will prove to be more difficult. There are also other factors that affect days on the market such as:  Availability of alternative investments in the market  Market need for your products or services  Desirability of the business (location, financial history, etc.)  Business structure of the company
  15. 15. 15 On the buyer’s side, these include:  Time frame to get into a serious deal  Financing capability  Business-related or personal activities that can delay their decision  Extent of conducting due diligence  Readiness to take full control of the organization HOW LONG WILL IT TAKE TO SELL MY SMALL BUSINESS? On the seller’s side, these include:  Readiness of required documents  Willingness to agree to terms set by the buyer  Desperation to sell
  16. 16. HOW CAN I SELECT THE RIGHT BUYER FOR MY SMALL BUSINESS?
  17. 17. 17 Not all sellers are comfortable just handing over their business to any buyer so easily. While they come under the scrutiny of the buyer, they must also make sure that the business will continue to prosper or recover from an impending failure. HOW CAN I SELECT THE RIGHT BUYER FOR MY SMALL BUSINESS? As a seller, you must also exercise your inquisitive nature by verifying if the buyer has enough capital for down payment and running the business, if he has a compatible industry background, and if he can share the goals with the organization after the sale.
  18. 18. WHAT TYPES OF SMALL BUSINESSES ARE GREAT FOR SELLING?
  19. 19. 19 Many small businesses remain in the market for a long time because they remain unattractive in the eyes of buyers or they’re just not profitable at all. Here are some of the best businesses to sell in the coming year: Are you Planning to Sell Your Business in 2020? These B2B Companies are Worth Buying WHAT TYPE OF SMALL BUSINESSES ARE GREAT FOR SELLING?
  20. 20. WHO CAN HELP ME SELL MY SMALL BUSINESS?
  21. 21. 21 You will most likely need the expertise and services of a commercial attorney, a certified public accountant, an investment banker (if you’re making more than $1 million in yearly profits) and consultants if you desire so. Remember that the more professionals who’ll work with you in structuring your business, the more service fees you’d have to pay. WHO CAN HELP ME SELL MY SMALL BUSINESS?
  22. 22. 22 So, what about a business broker? Many sources online would try to convince you that you may not be able the sell at the highest possible price for your business without the services of a broker. Take note that finding the right buyer doesn’t always depend on a broker’s search. In fact, working with a direct buyer is now encouraged since experienced investors would be performing the same services without asking you to pay any success fees at all. WHO CAN HELP ME SELL MY SMALL BUSINESS?
  23. 23. DO I NEED A BUSINESS BROKER TO HELP ME SELL MY SMALL BUSINESS?
  24. 24. 24 Working with a qualified business broker will help your business get noticed by buyers while maintaining confidentiality. Brokers would promise that you’d get excellent representation during buyer screening and negotiations as well as cut on the costs of doing the selling all by yourself. However, it’s a known fact in the industry that top-notch and competent business brokers are hard to come by. DO I NEED A BUSINESS BROKER TO HELP ME SELL MY SMALL BUSINESS? In addition, be prepared to pay for success fees, which is about 10 percent (or higher!) of the sales price. Wouldn’t this be a large sum that could have made its way to funding your retirement or to your immediate expense? Also remember that your business is not only the enterprise that a broker would be representing so the more they sell in a month, the more commissions they get - even if it means lowering your price just to hasten the selling process. In the end, you’d be pressured to sign the contract because you’ve lost control over the entire process.
  25. 25. 25 It is recommended therefore that small business owners work directly with buyers, especially with business investors and turnaround strategists that can eliminate the costs and risks of hiring a middleman in the process. DO I NEED A BUSINESS BROKER TO HELP ME SELL MY SMALL BUSINESS?
  26. 26. HOW DO I DETERMINE THE VALUE OF MY SMALL BUSINESS BEFORE SELLING IT?
  27. 27. 27 Your small business needs to have its value unlocked before putting it on the market, but this can be a difficult and cumbersome process. However, you can utilize a variety of online tools that will help you assess your business value by generating quantifiable insights for higher ROI. One trusted tool is The Value Builder System, which shows a scorecard that grades business performance in the 8 key drivers of value (financial performance, growth potential, Switzerland structure, valuation teeter totter, annuity-based revenue, competitor differentiation, customer satisfaction and business performance with an absent owner. It only takes 13 minutes to generate your Value Builder Score. HOW DO I DETERMINE THE VALUE OF MY SMALL BUSINESS BEFORE SELLING IT?
  28. 28. 28 HOW DO I DETERMINE THE VALUE OF MY SMALL BUSINESS BEFORE SELLING IT? Take the survey here: https://score.valuebuildersystem.com/transp horm-llc/brett-pittsenbargar
  29. 29. 29 THANKS!

×