Selling your business is one thing selling it well is quite another. This will be one of the most important transactions you will ever undertake and the choice of adviser is critical. Don't be tempted to do this work yourself you will almost certainly end up receiving less and the process itself is likely to damage your own or your business's health! A good broker will more than earn his fee.
The first point which should be addressed, before you commit to a sale, is what your needs are both financially but also from a life style point of view. People often underestimate the importance of the latter point and it is worth engaging in some detailed questioning of yourself and your nearest and dearest before you make any final decision. A good business broker should be prepared to provide a preliminary valuation, on a no-commitment basis, to assist with the financial part of the question. You will be asked to sign a Business Sale Agreement and it is important to check the terms of this. Most brokers work mainly on a success-based formula if this is not the case you should expect to pay considerably less.
Once engaged, the steps a good business broker should follow will be are generally as follows:
1. Owner needs analysis: at a simple level this will cover such areas as the deal structure and over how long and in what capacity the owner is prepared to assist the buyer. If an owner has a more complex financial position, there may be a need for a separate analysis of pensions, investment portfolios and his/her tax position. A good business broker will recognise this and know how to go about this task.
2. Valuation: the broker should carry out a detailed valuation of the business to determine the price at which it should be marketed. This requires a proper understanding of, often complex, accounting information as well as a good knowledge of the market.
3. Business Sale Document: this should be a well-written, error-free document which presents the business in a fair but also positive manner and which provides serious purchasers with all of the basic information they need to determine their interest in the business. It need not be overly long and a good business broker will be capable of quickly understanding and describing the essential points of a business.
4. Marketing: the business will be advertised, anonymously, via a number of different channels such as business selling websites, the brokers database and by direct approaches to targeted potential acquirers. The marketing strategy needs to be flexible so that if sufficient interest is not being achieved the correct decisions can be made to change this.
5. Achieving Heads of Terms: typically the marketing process will result in up to half a dozen meetings with different buyers and a good broker will manage these efficiently knowing when to step out of the important process of the 2 parties getting to know one another. Once the successful buyer has emerged, the broker will take an appropriate role in negotiations sometimes it is not appropriate for the broker to lead these but
rather to support the owner. Once the negotiations have been completed the broker should draft Heads of Terms which are unambiguous and accurately reflect the deal attention to detail is critical at this stage.
6. Monitoring to Legal Completion a good business broker will stay engaged with the process to ensure that the sale is completed as quickly as possible. Issues always arise at this stage and it is crucial that they are dealt with immediately as time is the owners greatest enemy once a deal has been agreed.
Whilst, at first sight, selling a business may seem simple it is not. It requires a knowledgeable, experienced professional you need to be sure that your broker is capable of carrying out all of the above steps to your satisfaction and, above all, ensure that you know who will actually be doing the work.