Sellers Ask Questions
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.
"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.
- Bizology - the
study of business for sale
to : info [at] bizology [dot] com
- Chambersburg, PA 17201-1712
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