If you’re ready to sell your business, read this first
Among the greatest benefits of owning your own company is selling it for big money when you are ready to move on. Unlike an employee that turns in their office key for the last time and walks away, you’ve built a valuable asset that others want.
So how do you approach selling your business? You could hire a licensed business broker to handle finding a buyer and guiding the process, or you could sell it yourself. But be careful. If a detail is missed or mishandled, it can spell disaster for your future and unravel a career’s worth of hard work.
To understand what’s involved, we asked one of Florida’s top brokers, Bianca Evans. Here are just some of the details to pay attention to.
One of the first steps is accurately pricing the business. If you’re like most owners, you have an idea of what you want for it. However, just like in real estate, you’ll have to find comparable businesses to put an accurate asking price on it. Price it too low and you leave money on the table. Price it too high and buyers won’t give you a second look. Getting this information is difficult to do without having a professional membership affiliation as a broker does. A broker will professionally value your business at no cost. The next best option is to hire a professional business valuator for $5,000-$20,000 depending on the size of your business.
A broker may reach out to competitors (if appropriate) to inquire about their interest. They do this anonymously so the competitor doesn’t know the name of the company. The problem is, this is nearly impossible to do if you are representing yourself. If word gets out that your company is for sale, it could cause problems. Competitors will use the information against you and customers will question if you’ll be around to service them. Employees will tune up their resumes and look for work elsewhere.
Not all willing buyers have the financial resources and credit needed to purchase a business. A broker knows how to ask the right questions and qualify buyers quickly. If you skip this step or don’t uncover critical information, you risk losing the deal after potentially months of work. Active business brokers have relationships with bankers that can get them quick answers about the possibility of successful purchase lending.
Be prepared to wait and be distracted
Someone listing their business themselves doesn’t have a network of ready buyers like a broker does. Drumming up interest will take significantly longer and may not happen at all. Even if you do find a buyer, the due diligence process can be taxing and distract you from everyday operations. Coordinating with banks, reviewing documents, and pulling together paperwork takes significant time. If revenues slip in the meantime, your buyer may ask for a further discount.
Find a banker to work with
You likely have a banker already, but you’ll need one that’s an expert in Small Business Administration (SBA) lending. Many banks say they do SBA lending, but few have knowledgeable, dedicated specialists. You don’t want to waste time working with the wrong institution. Chances are, your buyer will try to buy your business with an SBA-backed loan. This means the bank will want to take a look at your books and make sure that the business can produce enough cash flow to service the note plus pay the owner a reasonable salary. It’s good practice to get your business pre-approved even before you have a buyer. If you run into any problems or the bank has questions, you have time to sort it out.
Is your lease transferable?
Dust off your lease and have a look. See what it says about transferring the contract to your buyer. Many people don’t know that even if you can transfer the lease, the landlord will pull credit reports and do their own background check. If you do successfully transfer the lease, you’re still on the hook for the remainder of the term. If the new owner defaults, the landlord can come after you. Expect some legal fees at this stage.
Prepare to be challenged
As part of the due diligence process, the buyer will be inspecting your books and looking for anomalies and expenses out of line with industry norms. You’ll have to defend some of your decisions and it has the potential to become contentious. A broker can help diffuse a potentially volatile situation and provide guidance as to what requests are typical and customary. You need to know what is out of line.
Still want to sell your business on your own without broker assistance? Brokers are similar to real estate salespeople in that they ONLY get paid when the deal is done and the money hits the bank accounts. They are as invested as the business owner and are incentivized to make a successful match as soon as possible. A good broker can help you get more for your business by creating competition among buyers. While their services cost money, they can save you money too as in the case of legal fees. Evans has the support of a large company behind her, so they already have templated forms for buyers and sellers. They can get the deal moving before attorneys get involved. Without this resource, a business law attorney would be drawing custom documents that take hours and thousands if not tens of thousands of dollars to complete.
For most business owners, this transaction will be the largest in their lifetime. Only a very small percentage of owners even reach this milestone. The choice is to risk everything by saving a few thousand dollars at closing or feeling confident your interests are protected by a proven business intermediary.
About Bianca Evans
Bianca Evans is an experienced business broker based in Jacksonville, Florida. She is a top producer in her field. She has made over 160 transactions since 2006 which makes her among the most seasoned in the area. She is a Certified Business Intermediary (CBI), a Certified M&A Professional (CM & AP), a Board Certified Intermediary (BCI), and has her B.S. degree from the University of Florida.
Other notable accolades and achievements:
•The Million Dollar Plus Award 2008, through 2020
•Dealmaker Award top 3% in the state for completed deals 2018
-Most dollars sold in North Florida in 2018, 2019
•Sold an array of industries including manufacturing, wholesale/distribution, service, retail, restaurants, professional offices, and more.
•25 years of Sales Experience
She maintains her professional networks by participating in a variety of associations including the International Business Brokers Association (IBBA) and the Business Brokers of Florida (BBF).
One interesting fact about Bianca is that she used to be a business owner herself! She has been on both sides of the transaction when she purchased and later sold that same business. She finds that perspective invaluable when relating to her clients and balancing the many details and emotions.
She is licensed in Georgia and Florida and speaks fluent German.
To reach Bianca, email: email@example.com or visit her website https://www.myfloridabusinessbroker.com/