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Things You Should Know Before Selling Your Business

KNOWLEDGE - Deciding to sell your business is the easy part. How to go about it is another problem altogether. Setting a price, advertising, negotiating with a prospective buyer, and a sea of legal and financial details need to be addressed. Also, most accounting in a privately held company is done to minimize tax obligations and may not portray the company in the best light; we deal with this problem every day.

CONFIDENTIALITY - We can market your business without your employees, customers, suppliers, or competitors knowing that it is for sale. This is important to the smooth continuation of the business during the selling process.

TIME - We can save you time and frustration when it comes to selling your business. We’re the small business experts who can guide you through every aspect of the selling process - from arriving at a fair market price to handling financial arrangements and closing the transaction. We’re good at what we do. That’s why so many clients come back to Bay Business Investment Business Advisors.

MARKETING- Because so many small businesses go on the market each year, selling a business is a competitive ordeal. At Bay Business Investment Business Advisors of San Francisco, you have the advantage of our belonging to the Bay Business Investment Network, the largest network of Business Advisors in the United States, and, by our membership in the California Business Advisors Association, the largest network of Business Advisors in California. Thus we expose your business to prospective buyers locally, regionally, statewide, nationwide, and now, with the Internet, worldwide. In addition, we screen buyers. Because we work with each potential buyer in finding the right business, the prospect we bring to you is genuinely interested in and financially capable of purchasing your business. Only a small percentage of people who inquire about a business eventually purchases a business of that type. While this can be maddening if you try to sell your business alone, it’s a big plus if you are working with us. Since we receive many inquires each day, the fact that your firm is listed with us increases the likelihood of finding a buyer early in the selling process.

NEGOTIATIONS - Determining the right price, of course, is crucial. We’ll arrive at a fair market price that you can feel good about, because we know the prices of similar types of businesses in addition to trends at work in the market. We handle negotiations in a clean, patient, professional manner that keeps the business issues clearly in focus, rather than clouded by emotions and personalities.

SUCCESS - We at Bay Business Investment Business Advisors of San Francisco are well-trained professionals and we are aware of your needs. We have personal experience as small business owners, buyers, and sellers. Whether you are ready to sell your business now or are just beginning to think about it, call us for a confidential, no cost, and no obligation appointment. We will be happy to answer any questions you might have. Bay Business Investment Business Advisors of San Francisco can make selling your business a successful, rewarding experience

Q. What about confidentiality?

A. Unlike the sale of real estate or franchises, the sale of an ongoing business is very confidential for both the seller and the buyer. All inquiries are held in strict confidence. Meetings are confidential, and Bay Business Investment Business Advisors are available after hours and on weekends. The need for confidentiality is a major reason to use a Bay Business Investment Business Advisor since it is very difficult for a business owner to screen possible buyers without disclosing their own identity or the identity of the business.

Q. What is the value of my business?

A. Determining the value of the business is the first step in preparing the marketing plan for the business. Most buyers of small businesses are buying an income stream to provide a living for themselves and their family. Determining the value for the business based on the assets and owners discretionary income is vital to initiating a successful transaction. The seller needs to be realistic in setting the sales price and the downpayment amount. A Bay Business Investment Business Advisor can assist you in determining an appropriate fair market price or coordinating a business valuation.

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Q. Why should I use a Bay Business Investment Business Advisor?

A. A Bay Business Investment Business Advisor receives extensive training on selling businesses and has the resources from over 300 offices in the United States and several international offices. The Bay Business Investment Business Advisors network is the largest in the world. The number of advisors and transactions that are successfully completed each year give us a wide range of experiences and resources to handle every size of business and virtually every type of business. The Bay Business Investment Network has an extensive database of local, regional, national, and international buyers. Bay Business Investment Business Advisors interview potential buyers on a daily basis to match appropriate buyers with the right business. Your can focus on marketing your business so that the business owner can focus on running the business during the period when the business needs to be strongest. The Bay Business Investment Business Advisor will assist in finding the right price, marketing the business, interviewing potential buyers, insuring appropriate non-disclosure documents are completed, setting up and facilitating buyer/seller meetings, educating the buyer on the buying process, initiating an offer from the buyer, negotiating the terms and conditions, guiding both parties through the due diligence process, negotiating transition and training plans, removing buyer contingencies, coordinating inventory schedules, and getting both parties to the closing table with the appropriate documentation to complete the transaction. The Bay Business Investment Business Advisor is there to guide both parties through the process and to insure a smooth transition of the business.

Q. How do you find a buyer for my business?

A. Bay Business Investment has been in business since 1979 and is well established in the industry. Many buyers seek us out because of our excellent reputation and track record. We also develop specific marketing programs designed for each business. Any advertising or marketing is conducted with a blind ad that will protect the confidentiality of the business. The type of business and the types of buyers we are targeting will drive the actual marketing mix. We currently use local newspapers, yellow pages, trade publications, The Wall Street Journal, and several internet sites to include bizsel.com which is featured on USA Todays internet site. We also have relationships with organizations that refer buyers to us to include the SBA’s SCORES group. In many situations buyers find us, many buyers do not know what type of business they are interested in buying and we can present your business to these buyers. We interview new buyers on a daily basis to insure an appropriate match for the businesses we represent.

Q. How long will it take to sell my business?

A. Unlike real estate where there are several choices of the same type of house in the same geographical area there is only one business like yours. It normally takes several months to find the right match and on average a small business will sell in 184 days. Many factors drive the process for finding the right buyer. Sales price, location, type of business, owner’s available compensation, down payment, financing, terms and conditions, and availability of buyers. The main reasons for not selling a business are; unrealistic asking price, low owner’s compensation and down payment. This is a down payment driven transaction. The more reasonable the down payment the larger the number of available buyers.

Q. Will I need to finance a portion of the transaction?

A. The majority of small to medium business transaction have some form of owner financing which is paid from the revenues of the business. Banks are reluctant to finance business purchases for several reasons. A major reason is that all small businesses attempt to minimize profits shown on financial statements to reduce tax liability. Also, a bank cannot come in and manage a business if foreclosure becomes necessary. Therefore, over ninety percent of business purchases are financed by the owner themselves, which demonstrates their confidence in the ongoing success of the business.

Q. How are negotiations handled?

A. All negotiations are handled at arms length through your Bay Business Investment Business Advisor. The primary reason is to maximize the price you can get for your business, but just as importantly is to facilitate a smooth transition of the business under new ownership. All negotiations can be stressful and after you have closed the transaction you and the new owner will have a good working relationship to begin the transition period. Let your broker buffer any stressful negotiations. Your Bay Business Investment Broker has been trained and is experienced in negotiating successful terms and conditions for the transfer of businesses.

Q. What is the closing process?

A. Your Bay Business Investment Business Advisor will recommend using a professional closing officer. This improves the efficiency of getting the business transaction completed. While you will sell your business only one time, the closing organization closes hundreds. The advantage of the closing officer is that they represent the transaction and the best interest of both parties. It is very difficult, time consuming and expensive if either the buyer or seller have their attorneys prepare the documents. Let your Bay Business Investment Business Advisor coordinate the process of getting lien searches, property tax settlements, bills of sale, escrow and closing instructions, non-compete agreements, offset agreements, security agreements, abandonment of assumed names, documentation of incorporation, settlement statements and the wide variety of documents which are specific to each different transaction. You should be able to prepare your business for the transfer while the broker is coordinating the preparation of the documents for the transaction.