Selling a Business
Selling a business stems out from the motivation of the business owner who is seized with the thought of unloading the business from his or her life or seizing on to the opportunity to move on to do something else. For a potential buyer, the motivation of the seller is significantly important. A motivated seller needs a motivated buyer to come to common grounds where both are winners.
Principle of Cash Leverage
For main streets businesses on sale, the serious buyer applies Principle of Cash Leverage to buy cash flow of the business by least of his or her own cash, stronger terms of sale, and recovery time for the investment after making reasonable living on the business. An astute buyer will go beyond making reasonable living and explore growth potentials by infusion of cash into the business from within the business. For midsize businesses in the range of five to twenty million and above, game plan gets progressively intricate and falls in the realm of acquisitions and mergers.
Stages of Selling Process
The process of the sale of a business goes through some critical stages. These stages are briefly as follows:
- To sell or not to sell, is this question settled?
- Are co-owners or partners in sync to sell?
- What is the sale potential of the business?
- What is the worth and valuation of your business?
- What ought to be terms of sale?
- What is the best time to sell?
- Have you discussed with your CPA for formal advice?
- How is history of your business accounts and tax returns?
- Are you willing to make the buyer your partner in success story?
- Do you believe the sale of your business needs confidential handling?
- Can you distinguish between qualified buyers and lookers?
- Will you be willing to take a looker in the backroom and disclose your inner working?
Letter of Intent Stage
- Has your broker introduced to you a qualified and interested buyer?
- Is there a preliminary meeting of minds of the seller and the buyer?
- Is the buyer willing to make an offer to the seller by a Letter of Intent with contingencies?
- Has the seller accepted the Letter of Intent from the qualified interested buyer? If so, move to the next stage of Sale Purchase Agreement?
Sale Purchase Agreement Stage
- Has your broker prepared a draft Sale Purchase Agreement and taken approval from you and the buyer?
- Has your broker advised you and the buyer to have the draft Sale Purchase Agreement looked over by respective legal advisors get it fine-tuned for sign off?
- Has an escrow and closing attorney been involved at this stage for settlement work?
- Has timeline been set for the buyer to do the ‘Due Diligence’ on the business?
Due Diligence Stage
- Are you willing to show books to the buyer?
- Can you show and prove to a buyer what you stated and held out in books?
- Will your CPA and accountant satisfy buyer’s accountant and CPA of the nuances of accounts?
- Are you prepared to show to the buyer the set of procedures of your business to take over?
- Has the buyer cleared all ‘contingencies’ of the Sale Agreement so as to move to the next stage of closing the deal?
Escrow and Closing Stage
- Do you and the buyer have checklists to go by preceding day of closing?
- Have you coordinated all the activities with the buyer preceding the day of closing?
- Have you and the buyer reviewed post-closing agreements with respective legal advisors?
- Have you and the buyer reviewed settlement statements?
- Is seller ready to make a formal announcement of the sale of the business and introduce the new owner?
Services of SUNRISE BROKERS
We offer distinctly different and additional professional services as follows:
- We are the transaction brokers to facilitate bringing the seller and the buyer on common grounds for closing the transaction. We are confidants and advisors to both parties, and fiduciary to neither.
- We advise the seller how best to prepare the business for sale before we list the business to put out in the marketplace.
- Besides pricing your business, we recommend evolving terms of sale keeping your long-term and short-term objectives in perspective.
- We encourage other business brokers to sponsor qualified buyer candidates to us on referral fee basis on success.
- We are selective to take engagements to sell businesses.
- We take exclusive listings to market the businesses for certain duration of time on success fee basis, while the sellers retain choice to participate in selling the business at discounted brokerage fee.
- We prepare well formatted Executive Summary or Sale Memorandum for each business that we list for giving it to interested and qualified buyer that we may sponsor to the seller.
- We obtain signed ‘Letter of Business Interest’ from a qualified the buyer to take approval of the seller for a meeting with the potential buyer and guide the seller for presentation.
Briefly, we take care of all the stages of the sale process. We will get the hassles out of the way for you and encourage you to concentrate on your business. More spruced up your business looks and more cash flow it generates, the more value you add to your business and faster it moves to closing.