How quickly can I sell my business?
Each business is unique so this is a difficult question to answer. In a recent survey of business brokers, 28% indicated that a sale should take about 6 months; 31% said nine months; 21% said a year; and 10% said more than a year. When placed on the open market, many things impact the length of time a business takes to sell. The two most significant things that impact sale are the type of business being sold and the price and terms offered by the owner. The quickest sales occur when a property is auctioned. This may be a good alternative for those whose primary consideration is the speed of sale. One thing upon which all business brokers agree is that the earlier you start planning for a business sale, the better the likelihood of an outcome that meets the owner’s expectations.
Can anyone guarantee that my business will sell?
No one can guarantee a sale by a certain date or at a certain price. A sale can, however, be guaranteed through the auction process provided no minimum price is set.
How do I know what price I should ask for my business?
When you list a business with a business broker, you set the price for which the business will be listed. As offers are received, you decide whether to accept anything less than the price listed, so you will have control over the price you get. In presenting your business to potential buyers, it is vital that you have some way to justify your asking price. If you do not have a business valuation, we strongly urge you to consider getting one. Without some third party documentation, the sale of your business will probably be made using your business tax return. As your accountant will undoubtedly tell you, his or her function in preparing your return is to minimize your taxes, not to provide documentation for a business sale. Your tax return is probably not the document you want to use in negotiating the sale of your business.
Why should I list with a business brokerage firm as opposed to a real estate company?
Many business brokers are also real estate agents and the sale of a business often involves real estate. Businesses that are for sale are generally operational and unlike the homeowner, most business owners want the sale process kept confidential. Having a sign out front or otherwise letting the word out that a business is for sale, can have disastrous consequence on employees, customers and often lower the value of the business. Additionally, it is extremely rare that a real estate agent is qualified to assist an owner in determining the value of a business. Business sales are for business professionals like real estate sales are for real estate professionals.
How do I make certain that my employees and customers don’t find out that I am contemplating selling?
Our brokers are experienced at maintaining confidentiality. Prospective buyers sign confidentiality agreements before they even know the identity of a business.
What initial costs will I incur in selling my business?
That will depend on the services you choose and the information you already have to show a prospective buyer. A general rule of thumb is that business owners should plan on dedicating about 1% – 2% of the price of a business to its marketing for sale. To justify your asking price, you may want a business valuation done by an independent third party. You may also decide that you want a more aggressive marketing campaign for your particular business. What you have, what you need, and all costs will be agreed upon before we take a listing.
How is my business marketed for sale?
We have different levels of marketing, ranging from the marketing that we maintain on a regular basis for all our clients, to more in-depth programs that are available for certain types of businesses should the owner so desire.
How long does a listing agreement last?
Absent special circumstances, our agreements are for one year. For those owners that want to explore a business brokerage sale first, but have circumstances that dictate a sale in within a specified period, we have an affiliation with an auction company and can incorporate both into one agreement.
Is auction a viable alternative for selling my business?
It may be. The auction process is misunderstood by many as being a last resort to a failing business. This is not correct. While auction is certainly not for every business, it does have some advantages. First, the sale is on a date certain. Second, no maximum price is set on the business, so an auction might actually result in a higher price than traditional methods. This is because there are often several bidders, all bidding against each other. Third, auction can be done quickly. And, fourth, under certain circumstances, an auction process can guarantee a sale. This is why National Business Brokerage has partnered with a nationally renowned auction company. Now, our clients can utilize traditional brokerage, auction, or a combination of the two.
For further information, contact one of our brokers at (501) 207-0999.