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How to Sell a Business

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					?What's the Process?

If you are looking for information on how to sell a business, here is a quick summary
of the steps that are usually required. Selling a business is a much more involved
process than selling real estate. It takes a specific set of skills to properly sell a
business to get a fair value.

Listing your Business for Sale with a Business Broker

Meet with a reputable business broker in your area. Talk to them about the sales
process and what they will do to help you sell your business. Listing your business
with a broker is a good decision if you want to sell your business confidentially and
want to use the resources of a professional intermediary to guide you throughout the
process.

Determine a Selling Price

One of the first things that arises when people ask how to sell a business is the asking
price. This is something that a business broker can help you with for most businesses.
For larger or more complicated businesses you can use the services of a professional
business valuator to determine the selling price. You also need to think about what
you are selling - for instance, are you selling the business assets or shares (there are
tax implications - most small businesses are structured as asset sales though). You also
need to think about work in progress at the time of the sale and how that will be
transitioned and at what price, inventory, accounts receivable, etc. These are issues
you can talk to a business broker about as well as your accountant. Determining a
selling price and what exactly is for sale is an important step in how to sell a business.

Marketing and Advertising

A business broker will plan how your business will be marketed and advertised with
the end goal of achieving multiple interested potential buyers while maintaining the
confidentiality of the business sale.

Business Information Profile

Business buyers will need a brief ‘snapshot' of what your business is about - a small
‘teaser' if you will, to help them decide if they want to learn more. A business broker
with the knowledge of how to sell a business will put together this quick (and very
effective) brief snapshot of your business. It is a short description with one or two
lines of general financial performance. Rest assured, the business identity is not
disclosed yet at this point.

Upon showing interest in the business, a potential buyer would then have a
conversation with the business broker about themselves, their objectives and what
they are looking for. The broker will ‘qualify' and screen a potential buyer at this point.
If deemed to be appropriate, a business broker will invite the potential buyer to sign a
non-disclosure agreement and then would present the potential buyer with a fuller
information package on the business that would include a information on the
operations of the business, number of employees, a brief summary of the financial
performance and any other pertinent "general" information about the business. This
general information is under strict non-disclosure rules to help ensure confidentiality
of the sale. After reviewing this information, a potential buyer may decide if they
want to take their interest to the next level. This is a major way a business broker can
assist you in how to sell a business.

Showing the Business to an Interested Buyer

Presenting a business to a potential buyer is a major step in how to sell a business. It's
important to present an accurate picture of the business - blemishes and all. Buyers
can be jaded after a while and realize that every business may have their speed bumps
so it's important to be forthright and not sweep anything under the rug, so to speak.
This is, however, the time to ‘show off' your business's accomplishments and
showcase the hard work you have done to make it a success - this is the time to put
your best foot forward and, effectively how to sell a business by being honest - which
can be refreshing to some buyers. There will be a lot of questions at this point from
the buyer - try to answer everything you can, within reason though. It's important to
remember that there is a point where a buyer needs to make a conditional offer and
satisfy themselves through the due diligence process.

Getting an Offer and Accepting an Offer

The majority of business offers are conditional offers. They are can be conditional on
many different issues: confirming some facts during the due diligence process, getting
financing, assuming leases successfully, obtaining franchise approval, etc. A condition
offer is usually made with a refundable deposit (if the deal does not go through) and is
usually seen as being without risk for the buyer until they waive conditions and go
‘firm'.

Due Diligence

During the conditional offer phase, a business buyer will conduct their due diligence -
which is a critical step in how to sell a business. Here, the potential buyer will confirm
facts, go through financials and review the overall business operation very carefully.
If there ever was a time for a buyer to be extra meticulous, this would be it. The role
of the broker would be to help in facilitating the process and be a go-between for the
buyer and the seller.
If the buyer satisfies themselves that everything ‘checks out' during the due diligence
process and waives the other conditions all that is left is to close the transaction -
which involves signing documents through respective lawyers and exchanging money.


Ontario Business Brokers


Business for Sale in Toronto, Hamilton and surrounding areas in southern Ontario,
Canada. We are a full service business brokerage here to help you buy or sell a
business.

				
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