Selling Tutorial

Is it time to sell?

Selling your business is a major decision!

You have devoted your time, money, and energy into building, running, and operating your business. It may well represent your life’s work.

If you have already decided that now is the right time to sell, you want the very best professional guidance you can get.

This is when working in tandem with a professional business broker can make the difference between just getting rid of the business and selling it for the very best price and terms!

Following are some of the most common topics and questions frequently brought up by sellers.

If you have any questions that we have not covered, please don’t hesitate to contact us.

For Business Sellers

If you’ve gone this far, then selling your business has aroused enough curiosity that you are taking the first step.

You don’t have to make a commitment at this point; you are just getting informed about what is necessary to successfully sell your business.

This section should answer a lot of your questions and help you through the maze of the process itself.

“What is my business worth?” Quite frankly, if we were selling our business, that is the first thing we would want to know. However, we’re going to put this very important issue off for a bit and cover some of the things you need to know before you get to that point. Before you ask that question, you have to be ready to sell for what the market is willing to pay. If money is the only reason you want to sell, then you’re not really ready to sell.

It doesn’t make any difference what you think your business is worth, or what you want for it. It also doesn’t make any difference what your accountant, banker, attorney, or best friend thinks your business is worth. Only the marketplace can decide what the value of your business is.

For Business Sellers

Okay, let’s assume that you have decided to at least take the first few steps to actually selling your business.

Before you even think about placing your business for sale, there are some things you should do first.The first thing you have to do is to gather information about the business.

Three years’ profit and loss statements.
Federal Income Tax returns for the business.
List of fixtures and equipment.
The lease and lease-related documents.
A list of the loans against the business (amounts and payment schedule).
Copies of any equipment leases.
A copy of the franchise agreement, if applicable.
An approximate amount of the inventory on hand, if applicable.
The names of any outside advisors.

Make sure the financial statements of the business are current and as accurate as you can get them.

Prospective buyers eventually will want to review your financial figures.

If you’re like many small business owners, you’ll have to search for some of these items. After you gather all of the above items, you should spend some time updating the information and filling in the blanks. You most likely have forgotten much of this information, so it’s a good idea to really take a hard look at all of this. Have all of the above put in a neat, orderly format as if you were going to present it to a prospective purchaser. Everything starts with this information.

Insider Tips

The big question is not really how much your business will sell for, but how much of it can you keep? The Federal Tax Laws determine how much money you will actually be able to put in the bank. How your business is legally formed can be important in determining your tax status when selling your business. For example: Is your business a corporation, partnership or proprietorship? If you are incorporated, is the business a C corporation or a sub-chapter S corporation? There are also tax rules that impact certain businesses on seller financing. The point of all of this is that before you consider price or even selling your business, it is important that you discuss the tax implications of a sale of your business with a tax advisor. You don’t want to be in the middle of a transaction with a solid buyer and discover that the tax implications of the sale are going to net you much less than you had figured.

If you have any questions that we have not covered please don’t hesitate to contact us.

Who are the Buyers?

Buyers buy businesses for many of the same reasons that sellers sell businesses

It is important that the buyer is as serious as the seller when it comes time to purchase a business. If the buyer is not serious, the sale will never close. Buyers who want to go into business strictly for the money usually are not realistic buyers for small businesses.

A Buyer Profile

Here is a look at the make-up of the average individual buyer looking to replace a lost job or wanting to get out of an uncomfortable job situation. Chances are he is a male (however, more and more women are going into business for themselves, so this is rapidly changing).

Almost 50 percent will have less than $100,000 in which to invest in the purchase of a business. In many cases the funds, or part of them, will come from personal savings followed by financial assistance from family members. The buyer will never have owned a business before, and most likely will buy a business he or she had never considered until being introduced to it.

Their primary reason for going into business is to get out of their present situation, be it unemployment or job disagreement (or discouragement). Prospective buyers want to do their own thing, be in charge of their own destiny, and they don’t want to work for anyone.

Money is important, but it’s not at the top of the list; in fact, it probably is in fourth or fifth place in the overall list. In order to pursue the dream of owning one’s own business, the buyer must be able to make that “leap of faith” necessary to take the risk of purchasing and operating a business.

Here are just a few of the reasons that buyers buy businesses

Laid-off, fired, being transferred (or about to be any of these).
Early retirement (forced or not).
Job dissatisfaction.
Desire for more control over their lives.
Desire to do his or her own thing.

Keep in mind the following traits of a willing buyer

The desire to buy a business.
The need and urgency to buy a business.
The financial resources.
The ability to make his or her own decisions.
Reasonable expectations of what business ownership can do for him or her.

Still Have Questions?

After selling hundreds of businesses, we at we understand how complicated and sensitive the process of selling a business is. Share your questions with us, and we will get back to you with answers, resources, and guidance as soon as possible: