Ten Tips for Selling Your Business at a High Price with Low Stress; An Experienced Business Broker Weighs In

Ten Tips for Selling Your Business at a High Price with Low Stress; An Experienced Business Broker Weighs In

Selling your business for a high price can be like a chess game. You need to be planning three moves ahead – anticipating the other “player’s” moves. sometimes before you even know who you are playing!

Since most owners will only sell their business once, be sure to maximize your business sale profits and minimize your stress by preparing well for the sale. Experienced business broker and valuation expert Greg Caruso tells you how.

For a Downloadable PDF of this article, “Selling Your Business at a High Price with Low Stress; An Experienced Business Broker Weighs In” click here.

  1. Increase profits right up to the end. This item is first because it’s the single most important thing you can do to increase your business value. Too many business sellers take their foot off the gas once their company goes on the market. Stay focused on profits from the beginning of the sales process right through to the end. Strong profits also create excitement so that your buyer wants to close. That’s a really good thing.
  2. Make sure you are mentally ready. Selling a business can be stressful. All aspects of your business – even ones you may not want to deal with – are going to be reviewed. On a personal note, have you really decided what you are going to do next? Have you talked to your spouse, lawyer, CPA and other trusted advisors? Only you know what is right for you and your business but it helps to share your thoughts with those closest to you.
  3. Recognize that it takes 12 to 18 months to sell a business. Start early and know that it will be a process that takes time.
  4. Keep it confidential. In a perfect world, you would have been talking for years about selling your business with your management team and key advisors as part of your planning and goal-setting process. In the real world, if you have not regularly had that conversation and you are now starting the business sale process it is important to keep things confidential until people need to know.
  5. Have the conversation with family members. Similarly, if you want to sell to insiders or family members talk to them about it. The earlier the better. These transactions often take 3-5 years to plan and 5-7 years to execute. These may be difficult conversations but they are important ones if you really want a satisfactory outcome for all including yourself. Quick, last-minute inside deals rarely work.
  6. Prepare your business well in advance. Document your business systems. A quality system allows normal people to obtain extraordinary results every time. Remember if everything depends on you, you may not have a business to sell. Make sure equipment and technology are in satisfactory condition. You do not need to be cutting edge but if everything needs to be upgraded and replaced it will lower value. If you run a sloppy shop, clean it up. Emotion is a big part of this process and clean and organized says valuable.
  7. Obtain an accurate business valuation. Sorry but this is not a valuation from an app or free computer program. It does not need to be high priced but it should be performed by someone with real experience at doing valuations for pricing purposes. Anticipate being disappointed with the value as businesses do not sell based on owner effort. To get maximum benefit from the valuation work, talk to the valuer about how and why they arrived at the value and what you can you can do increase the value of your business.
  8. Your ongoing involvement after closing is likely. Realize that you are likely to be involved with your business from two weeks to five years after the sale. Your transaction may also have a seller note and/or an earn-out.
  9. Hire a professional. If you want to sell to outsiders, hire a quality business broker or investment banker. Find one that sells your size businesses or at least something close. Bigger firms are not always better. Experienced, honorable, and hardworking are good qualities to look for.
  10. Acknowledge it will take time. Recognize that selling a business is all about people and emotion and that those matters are not always efficient. Namely they take time. It is often easy to find prospects. Turning prospects into buyers, however, is complex and time consuming. And referring back to tip number 1, if you are busy working with prospects who is overseeing improving business profits? Selling your business is a balancing act that will take time and commitment.

Considering Selling Your Business? Please click here for a downloadable e-book, “ 10 Ways to Increase the Value of Your Business“.

Selling a business is a process. Harvest Business Advisors knows the process well because selling and valuing businesses is all we do.

If you have questions, please do not hesitate to email or call us. We are always happy to assist.
Greg Caruso, JD, CPA, CVA, Partner, Business Brokerage and Business Valuation and Appraisal, 609-664-7955 gcaruso@harvestbusiness.com

 


Clients choose Harvest Business Advisors for our sage advice on profitably growing their business, accurate business valuations, and when the time is right, a consistent ability to deliver a high price as part of a smooth exit transaction.
Harvest Business Advisors provides business brokerage, business valuation, and business succession planning services. We have extensive experience in the information technology and professional services, manufacturing, distribution, and contracting fields. We maintain offices in Maryland, New Jersey and Virginia. Connect with us at info@harvestbusiness.com or 877-838-4966 to discuss selling your business, ordering a business valuation or buying a business.

How Business Brokers Qualify Your Prospective Business Buyer

Early qualification of business buyers is powerful because people will tell you the truth at that point.  Once they know they have genuine interest in the business for sale the answers to questions start getting hedged as part of the negotiation process.

Never forget –Real motivations of buyer prospects brought out through questions are powerful.

People believe that qualification is a big scary thing.  It’s not.  Its a series of friendly questions designed to get direct answers.  Often the questions need to be asked in varying form several times.  Be direct but always be friendly.  Typically we do these over the phone – usually within a few minutes of the start of the call.  For instance…..

Prospect:  “Greg, I am calling you about the business you have for sale”

Me:  “Great.  Why do you have an interest in that business”

(General, safe question that helps me understand their big picture).

Prospect:  “I have worked in the industry a long time”

Me:  “What specifically would make this a great opportunity based on your experience?”

(Open ended question trying to understand big picture and indicate that I am listening by tying into last answer).

Prospect:  “Buying the business for a good price and seeing opportunity to grow it”

(In a real conversation I would probably ask “what a good price might be” and then “what indicates an opportunity to grow”).

Me:  “Have you looked seriously at other businesses – if so, why did you not buy them?”

(Again, probing for what is really being looked for – often buyer prospects don’t know this themselves).

Prospect:  “I spent time on another business but he did not have clear financials or any managers that would stay”

Me:  “You mentioned a good price – curiously (I love that word, very disarming) if you found the perfect business how much of your own money in your bank accounts do you have to invest?”

(You often have to ask this two or three times but 90%+ of the prospects will answer it at this point).

Often if the buyer prospect is clearly just beginning to look for a business I will ask if he and his spouse are willing to sign a personal guarantee with a bank putting their house at risk.   Many people are surprised that this will be a requirement so it is good to clear that up early.  When appropriate, I also will ask what income the buyer needs to make to support his family.

Now, lets look at what we have learned.

In about ten minutes we have learned that this prospect has motivations to own a business in an industry he knows.  He has experience.  We have some indications of things he will not buy (very important) based on the deals he did not do.  We know the amount of money he has to work with.  We have a good starting point understanding of this prospect and if he is likely to be interested and financially qualified for the business we have for sale.

So, in summation of how business brokers qualify:

  • Questions are key
  • Early questions are best because they tend to be answered honestly
  • Real motivations brought out through questions are powerful

Harvest Business Advisors will qualify your business buyer prospects early and thoroughly.  Then we can spend time on those buyers who have the ability and motivation to buy.

Clients choose Harvest Business Advisors for our accurate business valuations and our consistent ability to deliver the highest price in the smoothest sale transaction possible. Harvest provides business brokerage, business valuation, and business succession planning services. We have extensive experience in the information technology and professional services, manufacturing, distribution, and contracting fields. We maintain offices in Maryland, New Jersey and Virginia. Connect with us at info@harvestbusiness.com or 443.334.8000 to discuss selling your business, ordering a business valuation or buying a business.

 

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