Steps to Selling Your Business

Reaching agreement

Successfully selling your business is a full-time job. While finding a buyer is essential, determining that a buyer is qualified, willing and able to purchase your business is another matter.

Convincing the buyer to buy your business through careful negotiation, due diligence, financing, deal structure, funding and closing is the value that a business broker brings to the transaction.

A former client said afterward, “At first, I didn’t think I needed a business broker but after going through this process, I realized that the transaction wouldn’t have happened if you weren’t involved”.

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How to Increase the Odds of Selling Your Business

Improving the opportunity to sell your business

You may be surprised to learn that if you want to sell your business, there is about a one in five chance of actually achieving that goal. Even with strong financial performance, sometimes businesses with less than $1,000,000 in revenues don’t sell.

According to BizBuySell, the largest online business-selling platform:

  • only 20% of all of the businesses listed for sale ever sell,
  • roughly 50% of the deals agreed to between buyer and seller never close,
  • only 10% of sales are handled by business brokers

The last fact may explain the first two!

Buyers want to purchase successful operating companies. Buyers will pay higher multiples of earnings for companies that have a sustainable and repeatable cash flow stream, documented procedures and are staffed by competent and loyal employees.

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What Business Buyers Want

Business owners must understand what buyers want in order to successfully sell their companies.

As a business owner, you may have one or more choices when it comes to exiting your business.  You’ll either pass it on to a family member, sell it to a third party or shut it down. Generally, your business will have a different value in each of these situations.  Isn’t it a good idea to know how much your business is worth now so you can decide which choice is best for you when the time comes?

Recently, I spoke with a business owner with a 20-plus year track record who is considering a sale of his business. In his opinion, he has two options. One option involves selling to a family member.   The other possibility is to sell to a larger company.  I explained that one choice might bring a higher value. And the important thing to know, is which one.

There are several types of buyers :

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