By Ryan Jorden
Most people are unsuccessful when it comes to selling their business on their own. They simply aren't aware of what common mistakes to avoid and how to best communicate with potential buyers. At VR, we've honed our process over many years to provide you with the best chance to sell your business for the most amount of money in the least amount of time. Here's how we do it:
1. Getting to know each other
The process of selling your business is firmly entrenched in relationships from the moment you begin. Therefore, it's very important that we take the time to understand what your personal and business goals are, why you're interested in selling and what has contributed to the success of your business. This all leads us to a greater understanding of your business, what intrinsic factors are driving the value, what might motivate a buyer to purchase it and who that buyer may be.
Additionally, it's important that you have a firm understanding of what makes our process successful so you can determine if we're the best choice to work with you. We will answer all of your questions and explain the process to you in detail so you know where you're at and where we go together from here. The expectations we set for each other early on will help set the table for a smooth and successful sale.
As you may be aware, the accountant prepared financials of your business only tell one side of the story and do not represent the true earnings of your business. Therefore it's important to have a professional market valuation completed that can show true cash flow and determine the most probable selling price of your business. This fair market assessment will provide us with a firm foundation to justify the value of your business to a buyer, their accountant and their lender.
You don't want to be asking too much and thus fail to sell, nor do you want to underestimate the value of your business and leave hard-earned money on the table. At the end of the day, there isn't anything more relevant to whether or not you actually sell your business than what your asking price is.
3. Marketing & Finding the Buyer
After the results of the valuation have been discussed and you've made the decision to engage, we will then begin the preparation of your confidential marketing package. It is a professional presentation of information that is reserved for the eyes of a qualified, serious buyer. It will provide them with the data they require to understand your business and proceed with an offer to purchase.
We also require that all potential buyers sign a strict Non-Disclosure Agreement, complete a Buyer Profile and speak with us at length so we can determine that they have the ability to purchase and successfully operate your business. Nobody will be introduced to your business without the necessary skills, interest, qualifications, experience and financing.
The key in selling any business is showing it to the right person. To locate these buyers, we utilize our international database of qualified buyers, as well as generically listing it on the busiest 'business for sale' websites. Depending on your business or industry, we may also confidentially approach potential buyers directly to let them know we're representing an opportunity that may be of interest.
A larger number of qualified buyers mean a higher price for your business. Because of our dominance in the marketplace, we receive a few hundred buyer inquiries a month and currently have a considerable backlog of qualified prospects searching for businesses.
4. Meeting the Buyer
All initial showings of your business will be conducted through our secure Virtual Data Room. This allows us to deal with potential buyers from all over the world. Only qualified buyers that we believe are a good fit and have the financial means to complete the transaction will be provided "view only" access to your confidential marketing package. This gives them an opportunity to learn about your business and generate questions in preparation for meeting you in person.
Meeting the buyer in person will allow you to start building a relationship with them immediately and gives you both an opportunity to ask each other questions. An initial meeting will typically last 60 to 90 minutes and be hosted after hours at the business location. A business opportunity becomes more real to a potential buyer when they have the chance to meet you and view the facility location in person.
5. Offer to Purchase / Due Diligence / Closing
Once a serious buyer has been identified and qualified, we will assist in facilitating the negotiations. We know how to structure transactions to maximize the chance of a successful transition that works for all parties. We will work with the buyer to prepare the offer and counsel you on your options of accepting, countering or rejecting the offer and on what has to be completed before closing can take place.
Once a conditional agreement is in place, the buyer will get increased access to information about your business. This due diligence period allows for them and their counsel (accountant, lawyer, lender) to verify the information that they've been presented. We will coordinate the the flow of information in an objective and professional manner and provide both lawyers with the documentation they require.
We will also work with the landlord to assign the lease while your lawyer is drafting up the remaining documents that form the Final Purchase Agreement. This typically includes the non-compete agreement, promissory note and employment/consulting agreement. Once all of the conditions have been satisfied, and paperwork completed, money will be exchanged and the transition of ownership will be complete.
If you're thinking of selling your business, we would be pleased to answer your questions and assist you with this process. Let us put our expertise to work for you!
Ryan Jorden is the Managing Partner with VR Business Brokers in Calgary, Alberta, where he specializes in valuating and facilitating the sale of privately held businesses. You can reach him confidentially at email@example.com or visit our website to learn more. We can also connect on Twitter and Google+.