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Business
sales aren’t like residential real estate sales because
business prices are volatile. The value of a business can
change quickly within 30 days. A business can't be
shown like a home because of the confidentiality of
information related to the business like its financial
statements. Letting your customers, vendors, or employees
know your are intending to sell your business makes the value
drop quickly. It is critical to attract potential buyers
while at the same time keeping the sale confidential.
Have all your records prepared before you
list your business
Records such as:
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The last 3 years of federal income tax
returns for the business being sold.
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The last 3 years of financial statements
(profit & loss, balance sheet, and cash flow).
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The last 3 years of monthly bank
statements.
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A copy of the current lease.
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A List of all equipment being sold with the
business.
Most buyers and brokers will need these
records.
Have your business appraised for its value
Getting an independent professional business appraiser to
value your business is important for the sale process. Most of
the businesses listed for sale don’t sell usually because
they are over-priced, or the sale is structured inappropriately.
Getting a professional appraiser to perform a valuation is worth
the expense.
Write up a detailed summary of your business
Instead of explaining over and over all the details about
your business to various buyers, make a one page summary of
the business being sold. Buyers want to know all the
important details of the business they are buying. Your
summary will include:
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A history of the business.
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The date it was established.
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The number of employees.
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Important features about the business and
surrounding area.
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How you see the new buyer can improve the
business after purchase.
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What geographic area the business covers.
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The competition to the business.
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Your reasons for selling.
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How much you will train the new owners
after sale.
The importance of confidentiality
agreements
Have all potential buyers of your business sign
and date a non-disclosure and confidentiality agreement
before providing information to them.
Take the important step:
Pre-qualify your business
for Financing
If you are thinking that this is the buyers
responsibility, you are mistaken. This is a crucial step in
ensuring that possible buyers can get
SBA loan
financing
in the first place to buy the business from you. It is very
important, because if a buyer can’t get financing from a
lending institution, it would mean the owner will have to
provide financing. By pre-qualifying the business for
financing early, you will have
options for potential business buyers without a lot
of time being wasted. Remember that time kills deals. Get
this step done before you list your business.
Keep negotiations and communications moving
ahead
As time kills deals, you need to make sure your
negotiations and communications are moving toward agreements
at all times. Don’t let any situation sit too long.
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