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Most business owners retain
professional intermediaries to guide them through the process of
orchestrating, managing and concluding the sale of their
businesses. The goal is to insure that the business is sold to a
well-qualified buyer, in the shortest period of time and at
the best possible price. While investment bankers are
utilized normally in the ownership transfer of large businesses,
usually those with sales upwards of $20 million, professional
business brokers are the choice for most business owners.
Business brokers normally
represent sellers of businesses. Most are well-trained to
represent
sellers expertly throughout the entire process. (On occasion, a
broker may be retained by a buyer to seek out a particular type
of business of interest to the buyer.)
As with any professional service,
business brokers are compensated by a fee for their work,
normally a percent of the price for which a business is sold. In
other words, a business broker is not paid unless a business is
sold, i.e., it is a success fee. For smaller businesses, the fee
commonly is 10% or more of the selling price; for larger
transactions, the fee may be less.
Select an intermediary with whom
you can work comfortably, whom you can truly trust and respect,
and who can be counted upon to be successful in selling your
business. Don’t assume that every business broker operates
in the same way and with comparable records of success. For
example, a broker whose primary business is real estate sales,
as many are, may not have the requisite expertise.
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A
well-qualified, professional intermediary will:
- Assist in the preparing the
business for sale; collect, analyze and recast all
necessary operating and financial information.
- Recommend a fair asking price and
terms for the business, which maximizes the return
to the seller and provides a solid basis for
negotiation with prospective buyers.
- Prepare a confidential,
comprehensive, and fact-based selling brochure or
prospectus, designed to elicit interest in the
company from intelligent buyers.
- Develop a specific marketing plan
for the business. Implement the plan locally,
nationally and, in some cases, internationally.
Depending on the characteristics of the business,
target prospective corporate, private investor
group and/or individual financial buyers.
- Pre-qualify prospective buyers to
determine their financial strength, as related to
the asking price and terms, as well as their
managerial capability. Bind each to restrictive
Non-Disclosure Agreements before providing
confidential information.
- Manage the entire business
transfer process, guarding zealously the
confidentiality of the seller. Help structure the
transaction to see that the deal works for both
seller and buyer.
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Selecting the right business intermediary
and then providing the time and effort to work with him can mean
the difference between either completing a transaction
successfully or failing.
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The
process of selling most businesses is difficult and complex.
The easiest part normally is finding interested prospects; the
toughest is to obtain a fair offer and then move to a
successful closing.