Introduction: To Whom to Sell Your Business

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Individual Buyers

• Corporate downsizing has brought into the market business managers who are looking for new opportunities. These qualified managers see themselves buying and managing an established small business close to home.
• Most of these individuals do not the have the financial means to purchase a business outright. They will likely seek financing through a SBA loan or in some cases, seller financing.
• These buyers often request a transition period where the seller will be engaged for up to a year helping the buyer assume the full transfer of the business. The seller is usually paid a fee for these services.
  

The Competition

• The competition may buy your business especially if you have a market niche or product-line that they want.
  
• Sometimes it is financially feasible to buy an existing operation than to take the time and expense to build one up.
• Buying you out will depend on the strength of your market position. The stronger the market position, the more likely the buyout.
• The competition can secure the financing to buy you out. They may engage your services for a period to ensure your customers remain loyal to them.
  

Businesses Looking to Expand Their Current Line

• Sometimes an established business in your related field is looking to expand their operations or to move into a new product line or service.
  
• It may be a lot cheaper to buy an established operation instead of setting up their own operations in a new market.
  
• These buyers generally have the financing to make a out-right purchase. They will likely request management to stay on for the immediate period.
  

Businesses Looking to Invest

• You may find an investment group looking for investment opportunities. These investment teams will buy companies to divest or merge with similar businesses.
  
• They will scrutinize a company very carefully. They buy companies that are in growing markets, have good financials, maintain key management, and meet their investment objectives. They will pay top dollar for a company if these basic elements are in-place.
  
• Investment Groups generally request that management remain in-place for the immediate period. In some cases, they will bring in their own management team.
  
  

 

 

Important Tips Prior to Annoucing Your Sale

Keep It Confidential

• The decision to sell your business should be kept among yourself and other select individuals for the following reasons:

Avoid Upsetting Your Employees

• Any rumors of a sale can be unsettling for any staff. Your employees want job security. Rumors of a pending sale may prompt employees to seek other employment.

Some tips:

• meet with your staff frequently to update them on business plans
  
• speak privately with key individuals about your plans and assure them of continued success
  
• consider some pay raises, promotions, company picnics, etc., to maintain morale.

Keep the Competition at Bay

• Once your competitor finds out that you are for sale, they might undertake some moves that can undermine your customers, suppliers, and creditors.
  
  Rumors that "you will no longer be in the business" could damage the goodwill that you have developed over the years.

Some tips:

• touch base with your key customers — assure them of your continued service and business
  
• keep up good relationships with your suppliers and creditors
  
• pay your accounts on time

Move Quickly

• Once you make the decision to sell, jump into it quickly. The longer it takes to sell, the higher chance your employees, competitors, creditors, etc., may undermine your continued operations.

Some tips:

• Have your financials ready for review.
• Scrutinize and validate every potential buyer prior to showing them your sales sheet.
• Make yourself available as needed.
• Seek professional assistance from an advisor who can prepare the necessary documentation and keep things confidential and moving.

Failing to properly manage the sale of your business can cost you. That is why you need a NCABB business advisor who can valuate your business, package your company for sale, screen potential buyers, and negotiate the price that works for you.

What this selling prep will do -

• help you prepare the financials for outside review
• help you evaluate the true market price for your company
• help you complete the process to present your company to prospective buyers