Questions Seller Ask
Unlike the sale of real estate, the sale of an active, ongoing business must be very confidential for both the seller and buyer. All inquiries are held in strict confidence. All prospective buyers must sign our non-disclosure agreement before learning about any business we have listed for sale. The need for confidentiality is a major reason to use Sunbelt since it is difficult for a business owner to screen possible buyers without disclosing their own identity or the identity of the business.
We will create a series of “blind”, non-specific advertisements that will appear in local newspapers and in some cases trade publications. Sunbelt has developed a strong presence in the Internet and your business will be on several productive sites. Your business will also go in the “Sunbelt Network” of over 250 offices in 39 states and seven foreign countries for maximum multiple listing exposure. We will build a profile of your business that is used in the actual presentation of it to our prospective buyers.
Determining the value of the business is the first step in preparing the marketing plan. Most buyers of small businesses are buying an income stream to provide a living for themselves and their family. Determining the selling value will be based on the actual assets of the business and the owner’s true discretionary income. Some sellers want to overprice a business in the belief that they can come down. The fact is, many qualified buyers will refuse to look at a business that is overpriced, not realizing that they may be able to make a deal with the seller. Your Sunbelt Business Broker has several formulas that are industry specific in establishing values.
It normally takes several months to find the right match of the right buyer for the right business. There are many buyers looking right now, but your business must be the exact one that appeals to the buyer at this exact time. Not only must your business be just right, the price and terms must fit into our buyer’s ability. The sooner we have a complete package of information about your business, the sooner we can go to work. Buyers want facts. Your Sunbelt Broker is performance driven and will make every effort to bring interested and qualified buyers to you as quickly as possible.
Sunbelt will introduce your business to prospective buyers after they have signed our non-disclosure agreement. They will start the process through the written profile about your business along with detailed verbal description and response to questions. We encourage the buyer to visit your business (when possible) incognito to get a feel for the location, facility and nature of your operation. If there is continued interest we will then setup a buyer/seller meeting that will allow you to meet each other and to go into your business with greater detail. We should now have a very interested prospect.
When a buyer is sufficiently interested, we will assist in the preparation of a written offer to purchase. This Purchase Agreement will spell out the buyers offer in detail. The offer will contain several contingencies that the buyer feels must be met before the transaction goes to actual closing. We will present all offers to you for consideration until you find one that is acceptable to you. This is a contract and you will have the right to accept, counter or reject. It is important to know that time is important and this contract will expire if you do not respond. If you accept the offer, or you counter it and the buyer accepts your counter, be prepared to do some fast work to remove the contingencies. Your Sunbelt Broker will stay close to you until this deal is completed.
All negotiations are handled at arms length through your Sunbelt Broker. The main reason is to maximize the price you can get for your business, but it is just as important to make the deal actually happens. All negotiations can be stressful and after you have closed the transaction you and the new owner must have a good working relationship for the transition period. You want what is best for you, but you do not want to run an interested buyer off. Let you Sunbelt Broker buffer any stressful negotiations. An offer may look ridiculous to you now, but through proper negotiations it may turn out right.
You are not required to finance any portion of the sale of your business, but you need to be aware of the many reasons to consider this option. With reasonable terms, the chances for a timely sale increase dramatically, and at a higher purchase price. In many cases, business listed for all cash simply do not sell. Unfortunately, most banks and lending institutions do not make loans for the purchase of businesses. The major reason is that most small businesses attempt to minimize the profits shown on financial statements to reduce tax liability. You will need to understand that your new buyer will be considered a new startup without any track record. Seller financing may be the only way to sell your company. Sunbelt will show you the various ways to protect yourself if financing is involved. Seller financing emphatically tells the buyer you have confidence in the continued success of the business and the company can make the payments.
Yes, in most cases the terms of a non-compete agreement will be spelled out on the offer to purchase. This will allow you approve the terms if they are acceptable to you. The buyers will want this to protect their investment in your business. There will be allowable exceptions to some non-compete agreements that we can discuss with you.
Training will be important to most buyers, they need to learn your bookkeeping system, opening and closing procedures, who your suppliers and vendors are and their agents, introduction to employees and customers and general product knowledge. The normal time asked for is for 30-days with under two weeks actually being utilized.
Although it may sound cold, experience has shown that it is best to tell everyone about the change after the closing. The transfer of ownership should appear seamless, with no real change in relationships. Most all employees will stay with the new owner, vendors will accept the continuation of agreements and customers will not notice any difference. Of course there are exceptions, a key employee may need to know to assist in the training, suppliers may need to approve the credit of the new buyer, written agreements will need to be approved by the vendors and the buyer, leases will need to be approved, permits and licenses put in place, utilities transferred and other situations that may arise pertaining to specific businesses situations.
No. In the initial interview we will ask the prospective buyer about experience, qualifications and background. We will sometimes ask for a personal financial statement from the prospect, but we do not verify the information submitted. We do not run a credit report on buyers, we will get the buyer to supply a credit report to you if your transaction involves owner financing. Generally, if the buyer has sufficient funds for the down payment and working capital, that is a good indication of qualification. The buyers will be required to give you their personal guarantee in writing along with a promissory note and a financial statement so you may approve credit before financing.