Five Common Questions Business Sellers Ask Business Brokers

Five Common Questions Business Sellers Ask Business Brokers

The three partners at Harvest Business Advisors – Greg Caruso, Eddie Davis and Richard Stopa – have helped hundreds of business owners sell their businesses. Each business sale process is unique – but the questions we are asked by the owners remain fairly consistent.

1. When should I sell my business?

Sometimes this question is in response to changes in the economy or the stock market. Or an owner is feeling discouraged about sales or challenges in the business.

The answer is “It Depends”. We do not have any special forecasting skills to help you make a decision. But we can tell you that business sales usually take 9-18 months, so selling is not a quick fix to a downturn.  While your business is on the market, you will need to continue to run your business, upgrade systems, keep an eye on profit opportunities, document processes and keep key employees engaged. It’s essential for the sale of the business.

Other times this question is in response to internal or personal changes. We hope you are not dealing with health issues, but if you are, the time to plan is now. If you are not as satisfied running your business, an exit planning session can help set goals so you know you have options, if and when you decide to sell your business.

 

2. How much money will I get?

This is another question without an easy answer. But realize that pricing is an art form – too high and all the buyers will be chased away, too low and you will not receive full value. It’s important to have a business valuation to establish a baseline value which will help you to determine how to price your business.

Be prepared for bargaining from buyers (that’s their role!). It’s not meant to demean your business, but it is part of the process.

 

3. Who would buy my business? How do I find buyers?

Usually, business owners think about competitor who might want to purchase their business. And we see that happen quite a bit. It’s an easy way for a business to expand their client base, their equipment and personnel. But that is certainly not the only option.

Business brokers try to look at complementary businesses who would grow their business in a new direction. An example would be a landscaping company who purchased an irrigation company. Or a law firm who acquired a consulting firm that could expand the services they provide their clients.

We also use professional associations to find businesses and business owners who are aligned. Sometimes there is an employee who is ready to be their own boss (sometimes that employee works for you!)

Business brokers, especially those who have been in the business for a few years, develop relationships with people looking for the “right” business and investors who are seeking profitable businesses to invest in. We also focus on finding more than one potential buyer, to develop an “auction” atmosphere (and a higher selling price).

4. What do I tell my employees? And when?

Long before you decide to sell your business, you should protect yourself by having your key employees sign Non-Disclosure Agreements (so they do not discuss the details of your business with anyone outside the business) and Non-Compete Agreements (so they cannot work for a competitor for a specified period of time). Both of these agreements can be customized to be fair and equitable to you and your employees.

We generally recommend not telling your employees the business is for sale until the sale is final, with the exception of key employees who may need to be involved in the due diligence process and meet with the prospective buyers. Guaranteed, your employees will know something is going on. The best you can do is present the business sale as a positive for them, an opportunity for growth.

5. What will I do after I sell my business?

There’s a question we cannot answer! After a transition period with the purchasers, most “former” business owners take some time getting used to their new normal. Some spend time improving their golf game or finding new places to fish. Others make up for lost time with their families. We’ve seen people buy an RV and hit the road – or discover a passion for giving back in their communities. The bottom line is, after your business is sold, you will decide what is next, what will make you fulfilled and happy.

 

If selling your business is on your mind, we’d be happy to talk to you about what to expect and the options and timing.  We can have a relaxed conversation by phone or over coffee to answer some of your questions. Feel free to reach out to us!


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.

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.

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