Good preparation has its reward!
Before Meeting with Buyers You Should …
- Write down your goals for the sale. Know what you must net from the sale.
- Review everything you’re selling. Is it organized? Working? Does it look good? Is it necessary? Is it clean?
- Fix things that must be fixed.
- Spruce up areas that have run down.
- Know what you need to achieve.
Also, Before Meeting with Buyers We Will …
- Prepare to prove the value of your business to naturally skeptical Buyers.
- Prepare a suitable transition plan that’s fair to the buyer and realistic based on the complexity of your business.
- Prepare to search for the right buyer.
- Prepare a compelling presentation.
- Price it fairly in today’s market.
- Position it in market for the best advantage.
- Promote it aggressively yet confidentially.
- Promotion: Highlighting the Positives!
- Confidentiality is vital when selling a business to protect its value.
- Relationship between Buyer and Seller is ongoing after closing.
- Credibility of all material information supplied by Seller is vital.
- Patience is rewarded. In time, the right buyer will be found.
- The higher the down payment requirements, the fewer the qualified prospects.
- Most Buyers’ don’t really know how to value your business. Burden of proof is always on the Seller. It’s not personal!
- Up front disclosures are a must to avoid deal-killing surprises.
- Negotiation is normal. It’s not personal!
- Surprises are deal wreckers!
Deal Road Blocks
- Price appears to be too high, aka Price Not Justifiable.
- Revenue or earnings not clearly provable.
- Seller won’t carry OR train OR non-compete.
- No manager who can run daily operations.
Why Do Buyers Make Offers?
- Buyers make offers to get the Income they need for their lifestyle.
- To get a good deal.
- To gain self-esteem from pride of ownership.
- Believe they can get the capital to buy it.
- Believe they can successfully run your business.
Common Red Flags for Buyers
- Representations or omissions, even minor, that prove to be both wrong and bad for the Buyer.
- If it’s so good, then why is it for sale?
- Fear that Seller may not really be getting out of this industry and might become a competitor.
- Feeling that the business may be too hard for buyer to really learn and control.
- Unreported Revenue and unreported expenses.
To Get the Deal Done Buyer Concerns Must be Met. What’s Next?
- Parties enter into a “conditional” contract.
- Buyer puts earnest money into escrow.
- Buyer investigates Seller’s proof of earnings and other material issues.
- Seller investigates Buyer’s ability to fund the purchase and to make payments.
- If and when both parties are satisfied and financing is approved, the contract becomes firm.
Closing and Beyond
- Closing is scheduled based on availability of funding and to suit the parties.
- In preparation for closing lien searches are conducted regarding the assets being sold, including title searches if real property is involved.
- In order to close Seller must show proof of clear title – free of claims from creditors, judgments, equity holders, third party interests, and marital interests.
- After closing, most Sellers and Buyers will have an ongoing relationship that includes Buyer making payments to Seller and Seller familiarizing Buyer with business.
Visit us at www.arizonabizsales.com for more information. Thanks!