Sellers Ask Questions selling a business explained by bizology business brokers


Selling a business can be one of the most traumatic experiences you ever encounter. After all, it is a child! You gave birth to it or adopted it, you fed it carefully, you sacrificed and went without so it could nurture and grow... and now, it's time to let it go.

There will be many questions going through your mind.

"Should I?"

"How could I?"

"Only if they pay..."


One of the first things you may want to do is consult with your accountant and attorney. There were tax code changes in December of 1999. You may make more money by selling for less. Establish your allocation basis now and have all the questions answered before the are asked.


Next, you need to ask yourself if you can sell it by yourself or should you use a broker? One of the worst things you can do is put word out there that you are for sale before you are ready. Or ask more than it is worth. Are you going to finance the sale? If not, who is? Find out what the business 'qualifies for' in purchasing power. Those are some of the avenues a broker can guide you down.


How much time have you set aside for the business to sell? Months or years? It is more than price and terms. There is also transition period and a time of non-compete. The process of due diligence and closing can take weeks or months. Some franchises require the buyer to attend their school before the closing. Franchises typically have a 30 day right of first refusal to match any offer. It all adds up in time...


How will the sale be kept confidential? Most buyers are required to sign a personal guarantee of non-disclosure regarding the possible availability of the business. Many times, the business is not marketed locally or in a multi list system. It is important to also qualify the prospective buyer for the availability of liquid funds to go ahead with the business purchase. Just as a buyer will balk at you not having prepared records, the broker will balk at a buyer's reluctance to disclose his financial wherewithal.


Will I have to finance the sale? Yes and no. The buyer wants to see the willingness on the seller's part to finance all or part of the sale. It shows the seller has faith in the business. If your business is properly priced and packaged, a buyer may get SBA financing and only ask you to hold a 10% second mortgage as good faith. Heck, that's practically a cash sale! It has been proven over and over again that a seller will receive more proceeds by offering financing. Even a lower price all cash may not result in as much as a higher price with favorable terms.


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