Down to Business: Make a plan to sell

December 27, 2014 7:00 am (Article Edited by Eric J. Gall)

Q: I want to sell my business. What do I need to consider?

A: Selling a business is a process that requires planning, preparation and a willingness to take a hard look at what you actually have for sale. It may take time to prepare the business to get the best price. You will want to advertise the business is for sale, while keeping the business operational. In other words, you don’t want to lose your employees and/or customers in the selling process.

A good first step in the selling process is to create a selling plan starting with a list of all the assets and benefits the business has to offer. What is the value of those assets to a potential buyer? Will those assets provide collateral to a lender if a buyer needs financing to buy the business? A buyer and their lender will need to see two or three years of business yearend financial statements and tax returns. Now look at the drawbacks in the business. Is the business profitable? Is equipment in good working order? A buyer will discount the price they are willing to offer for the business if they feel there are costs they will incur to repair equipment or overcome other negatives in the business.

Next, determine the best way to market the business to potential buyers. You have several options including a business broker, running an advertisement, the internet, word of mouth, selling to employees or a supplier or a customer. To find a professional business broker, contact Eric J. Gall at 239-738-6227 or eric@buysellflbiz.com. One advantage of utilizing a broker is that they have professional experience in responding appropriately to inquiries and understand how to move a deal forward. Using a broker also makes the confidentiality issues easier for you. Be sure the broker is prescreening buyers before sharing too many details of your business. Some brokers are more interested in quantity than quality, so ask then how they screen buyers to make sure they are legitimate.

Advertising should highlight the strengths of your business. Some items you might want to include are the previous year’s gross sales figure, general location, how long the business has been in operation, and how many employees you have. If your sales package includes property, include the square footage or acreage and the appraised value of the property. Your aim is to provide enough information to generate legitimate buyer interest, but you don’t want to make any specific promises or lure unqualified purchasers. If you belong to a business or trade association, they often have newsletters and websites which carry classified ads for their members.

Selling your business may take several months or years depending on the type of business and the asking price. Buyers will want to verify they can receive a reasonable return on the investment they make. It may be necessary for you to assist a buyer by financing some of the purchase price of the business. Contact your attorney for assistance with the sales contract and your accountant for help valuing the business.  A good business broker will work with both to make the selling process much easier.

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For additional information regarding Florida business sales, acquisitions and valuations, please contact Eric J. Gall at info@buysellflbiz.com or 239.738.6227. Also, visit our Florida Business Exchange website at www.fbxbrokers.com and my personal website at www.buysellflbiz.com.