Selling a business is often a difficult and time consuming process. To achieve full value for your business, it is important to have it properly prepared for sale. This often takes a team including a business broker and your CPA.
The most important step to preparing a business for sale is understanding what makes it attractive to business buyers. Buyers are initially attracted by financials, i.e., increasing or stable revenues and profits, and are often interested in a business with a loyal customer base, a competitive advantage, or a strategic fit with their present business. Preparing a business for sale may take up to two years to make it attractive.
Here are the key steps required to prepare your business for sale:
● Understand the approximate value of your business. Your FBX intermediary offers three levels of business valuations: 1) a complimentary market opinion based on sales of similar business over the past 10 years; 2) a limited scope valuation based on a weighting of several accepted accounting methods and sales of similar businesses; 3) a full scope valuation approved by the Small Business Administration for financing.
● Hire an experienced business broker. FBX business intermediaries are former business owners who have successfully been through the sales cycle personally. They have also assisted business owners in completing transactions worth over $275,000,000 in the past 10 years.
● Work with your CPA to keep your tax returns and accounting records clean and up-to-date. Minimize the amount of personal expenses you run through your business -- exceptions are owner salary, medical benefits, interest, depreciation and taxes. You will need the past three years of tax returns and profit & loss statements available. You will also need your latest balance sheet and the current year's quarterly profit & loss statement.
● Your FBX business intermediary is an expert at putting together a confidential memorandum describing your business including financial performance, operations, marketing strategy, human resources, lease agreements, assets included in the sale, etc.. The confidential memorandum will help answer the majority of a buyer's questions before an offer to purchase saving you time and aggravation.
● Use your FBX intermediary to maintain confidentiality regarding your business sale and filter tire-kickers and unqualified buyers. Our process requires a non-disclosure agreement, a personal financial statement or other verification of liquidity, and a history of business ownership and/or work experience. Names of all qualified buyers are run by the seller prior to providing the name and location of the business.
● FBX intermediaries are experts at handling negotiations and finding creative ways to keep deals together. Negotiations are often tough. FBX intermediaries help diffuse emotion and find solutions to overcome problems with deal structure and financing. And, once a deal is inked, over 50% of all deals fall apart during due diligence. An experienced intermediary will again help diffuse emotion, find solutions to problems, and get the deal to closing.
Selling your business is often a once-in-a-lifetime event. You get one chance to do it the right way. Seek the advice of qualified advisors such as a FBX business intermediary and your CPA.
For additional information regarding Florida business sales, acquisitions and valuations, please contact Eric J. Gall at eric@buysellswflbiz.com or 239.738.6227. Also, visit our Florida Business Exchange website at www.fbxbrokers.com and my personal website at www.buysellflbiz.com.
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