Selling a Business
We are here to help, from pricing your business to closing the sale.
Why sell through a business broker?
Selling a business is a specialized function. Just as you wouldn't do your own legal or tax work, you should have professional help when it comes to selling such an important asset. Owners choose to sell through a business broker because:
- An owner representing themselves can't stay anonymous. Lost confidentiality can seriously hurt the business before the sale if competitors or employees find out.
- An owner may not be up to date on the law, accounting, taxes and marketing of businesses.
- An owner rarely has the time to contact, screen and qualify the many prospects it takes to find a serious buyer who will offer a fair price. Beltway has a nationwide network of partners looking for the right buyer for your business.
- A broker has the experience, knowledge and negotiating skill to sell businesses effectively and for the best price, especially in an emotional negotiation where the buyer's objectives are the opposite of the owner's.
We can make the difference
Working with a professional business broker can make the difference between an owner just "selling" a business and selling it to the right buyer for the right price and terms. Because of Beltway's extensive contacts with qualified buyers, we have a far greater ability to find the right buyer than most owners would on their own.
Questions and answers
What does a business broker do?
Business brokers make sales happen by helping determine the price of the business, structuring terms acceptable to both seller and buyer, and coordinating the process until the transaction closes.
Beyond valuing the business, structuring the deal and finding the right buyer, Beltway acts as a "project manager": we coordinate with your other professional advisors, lenders and other parties, work with you on financing, and plan for an orderly, profitable change in ownership.
How are businesses priced?
Inevitably, in a first meeting a seller asks what we think their business will sell for. Before we can suggest a price or a range, we need to review the business's financial information. Most sellers have an idea of what their business should sell for, and that's taken into consideration, but by reviewing the financial records and applying our knowledge of the market, we recommend what we believe the market will bear.
A range is normally set, with a low and a high price. The more cash the seller demands at closing, the lower the selling price; the less cash required, the higher the price.
How long does it take to sell a business?
On average, between three and four months. Some types of business take longer, others less. It's important to price the business properly from the start. Some sellers overprice on purpose, thinking they can always come down later, and it often backfires: buyers will refuse to even look at an overpriced business. Almost any business is salable if the price is fair and the terms are structured properly.
Experience shows the down payment is a key factor in how quickly a business sells. A lower down payment generally means a faster sale, and a reasonable one also tells buyers the seller has confidence in the business's ability to make the payments.
What happens when a buyer becomes interested in a business?
We help the buyer prepare an offer, proposal or letter of intent, which may have one or more contingencies, usually a detailed review of financial records and possibly the lease, franchise agreement or other details. The proposal is presented to you, and you can accept it or make a counter-proposal. Keep in mind that the buyer can withdraw their proposal at any time until it's accepted.
Look at every offer carefully. An offer that disappoints at first glance may have counterbalancing advantages that deserve serious consideration. There's an old adage that "the first offer is generally the best offer." That doesn't mean every first offer should be accepted, but every offer should be carefully evaluated.
What happens when the parties reach agreement?
Beltway works with both parties to satisfy and remove the contingencies in the offer. It's important that sellers cooperate fully, and above all avoid anything that might make the buyer think some aspect of the business is being hidden. The buyer may bring in outside advisors, and their reasonable requests deserve a timely response.
When all contingencies are cleared, the final papers are drawn up and signed. At closing the money is distributed and the new owner takes possession. Beltway works with you throughout the entire process.
What can sellers do to help sell their business?
First and foremost, treat it like selling a home: fix up, clean up, paint as needed and make sure everything is in good working order. It's basic, but many sellers overlook it. You only get one chance to make a good first impression.
Make time to cooperate fully with Beltway and the other professionals involved. Buyers will want up-to-date financial information, so work with your accountant to have current figures available. If an attorney is involved, make sure they know the closing process for a business in your state. If buyer and seller want to close quickly, usually within a few weeks, the attorneys must be ready to meet that schedule; missing it may allow the buyer to change the original proposal.
Finally, your whole team of advisors should be working toward the same goal: selling the business for the best price and terms available, and closing as quickly as possible.
Should the seller finance part of the transaction?
A better question may be how much the seller will finance. Almost all sellers finance a portion of the sale. A seller unwilling to help with financing will almost always face a longer sales process and a lower price.
On the positive side, seller financing is usually short-term, generally five to seven years, amortized over a longer schedule (perhaps 15 to 20 years) with a "balloon" principal payment at the end. Five to seven years after the sale, the new owner should be well established and able to obtain their own financing.
We can help you sell your business.
Find out what your business could sell for. Every conversation is confidential.