Business Brokers
A DETERMINED AND RESPECTED BREED.
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The tightrope walk during a sale is very precarious and without a guide the simplest of little things will cause the whole deal to fall apart. After all you can always save money by defending yourself in Court also ! We have incurred every conceivable situation from sellers who decide not to sell to buyers who try to lower the price after signing ! Bottom Line be prepaired .
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SELLING YOUR BUSINESS FREQUENTLY ASKED QUESTIONS Should we tell everyone? It is our philosophy that it is never advantageous for a customers to be aware of a pending sale. After the sale and only when the prior owner was a liability to the business is it a wise move. (One of the business we have sold, the customers are still unaware of the change of ownership 2 years later) There is always an exception to this rule but "would you purchase from a business that may not be around tomorrow?" or "would you supply to a company that may be going out of business?" and yes, 70% of people perceive a company for sale is in trouble. "1% has an effect on sales"Thinking about selling your business? More and more owners of small and medium sized companies are considering the advantage of selling their business these days. Of the approximately one million businesses that will change hands this year, most will involve privately held companies selling for $100,000 to $5,000,000. Until business owners experience a merger or acquisition, few will know what to expect or how to proceed. In the lives of entrepreneurs, few events are more emotional or significant than selling their business. Entrepreneurs should ALWAYS be thinking about the possibility of selling. We have set out below some of the most frequently asked questions by existing business owners: WHEN IS THE BEST TIME TO SELL? To place yourself in the strongest possible negotiating position, the optimum time to sell is before you are forced to do so due to health reasons. You should actively start the process AT LEAST one year before you want to complete the transaction because it usually takes at least six to twelve months to sell a business. Also consider that the buyer may wish you to stay on for a transition period. HOW DO YOU GET THE BEST PRICE AND FIND THE RIGHT BUYER? Good accounting records are one of the most critical tools in maximizing the value of your business. You need a steady record of profits, hard assets on your balance sheet, a proprietary product line or strong market position together with a solid employee base that can run the business in your absence. HOW DO YOU DETERMINE HOW MUCH A BUSINESS IS WORTH? There is no simple method and many variables come into to play. To approximate the value of your business, you should consider both its assets and earning power. The appraised, or fair market value, of assets provides a minimum worth amount. Earning power is a function of annual earnings, with expenses due to private ownership, added back to profits. This “Adjusted Profit' is divided by the appropriate capitalization rate (generally in the 20% to 50% range). Most buyers place extensive weight on the company's ability to generate earnings. Location, type of business, length of time in business are some of the other factors that also come into play when determining a valuation on your company. HOW LONG WILL IT TAKE TO SELL? Every company is different but with good books and a realistic price it should sell in 18 months the biggest problem I have seen is when the company is "run down" after it is placed on the market. HOW MANY SHOWINGS WILL I HAVE? If you use a realtor = hundreds Cost=6% to 12% WHY NOT USE A REALTOR INSTEAD OF A BUSINESS BROKER? If your business is entirely based on property, then a realtor could effectively sell your business. If however, intangible assets need to be assessed, such as profit, goodwill etc., you will be best served by a professional who has specialist knowledge and experience with business sales. A business broker will pre-screen potential buyers so that you will not be bothered by people who do not qualify financially or who have an agenda other than purchasing the business. Confidentiality will be of primary concern to your broker and he will be careful not to disclose information about your business unless he is sure of a serious potential buyer. A specialist broker will also target the sale of your business to the market area that will serve you best. Your business will be advertised in a way that will offer maximum exposure to potential buyers without making the sale ‘general knowledge'. Always remember too, that your broker has experience in the business world beyond buying and selling realty. It is this experience that will help him guide you through the process of selling and eliminate potential problems before they arise. I HAVE A BUYER AND DON'T WANT TO PAY A COMMISSION Evan if you have found a buyer or have potential purchasers in mind such as your competitors a broker can ease the process, providing documentation and advice on issues that will invariably turn up. They will also instigate the negotiations acting as a liaison between buyer and seller. Negotiate with the broker the commission based on you finding the buyer. All good brokers offer a fixed fee based on them just doing the paperwork. HOW MUCH WILL ADVERTISING COST The basic marketing is usually included in the commission, however if advertising is placed in trade journals and periodicals they are usually passed on to the seller. Most buyers are found by the Broker, many of them register, so they are informed when a business is placed on the market. I WOULD LIKE TO MAKE AN OFFER TO MY COMPETITOR No problem we are more than willing to contact them with a potential proposition for merger acquisition or outright takeover. This negotiation can be undertaken discreetly without the competition being aware of your intentions or for that case your involvement at all.
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