Typical Seller Process – 2019

Updated from earlier post.

Everything we say is routine, turns out to have its own twists and turns.  This is true with selling a small business as well.  In this case, a small business is one that has perhaps $3,000,000 in annual sales.  It may not be so small to operate and certainly requires the ingenuity of the owner.

From the seller’s perspective a typical sale looks like this:

  • The owner elects to have me do a valuation.
  • This takes about 10 days from the time I receive all of the materials.
  • I present the owner with a value that meets standards and a marketing package/draft.
  • The owner elects to list with me (or not.)
  • The listing may be amended with an individual or company who has already expressed an interest – there are specific terms. Just ask.
  • The business is marketed according to our mutually agreed to plan and materials.
  • I vet all comers, sending materials to only those that meet certain requirements, including signing non-disclosure, do no harm agreement.
  • The owner (with me) has a phone or in person meeting with those who have a keen interest.
  • The buyer may request additional information to be sent and it is the owner’s decision whether to release it before an agreed-to offer.  The owner needs to have a certain comfort level that the buyer is not merely a tire-kicker and has capability to buy and operate.  The latter is particularly true if the owner is to be asked to finance a share of the sale.
  • The offer is presented and you agree, counter, walk away.
  • Due diligence begins.
  • Final documents are typically drafted by a neutral attorney at $1,200 a side, plus GRT.
  • You close and retire to live happily ever after!  Or, maybe you buy another business.

From the time of offer to close can be as short as two weeks if it is a cash offer.  With financing the close can be as short as 30 days.  However, with bank or other financing, in today’s environment, the process can be delayed.

Not every business sells.  Beyond marketing, perhaps the three most important features to help ensure a sale are:

  • Right price and terms
  • Well organized and managed
  • Openness with the right buyer

Excess Inventory

April 29, 2017 blog No Comments

Recently posted a message about excess inventory – how does it influence the value of the business for sale.  This is what they said and I agree: Some of you have asked in response to our #1 FAQ about inventory, how is “excess inventory” dealt with? As mentioned in our previous post, PeerComps “values” […]

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Financing a Biz Purchase – Some Methods

April 27, 2017 blog No Comments

Obviously the quickest and easiest financing of a business purchase is to reach into the pocket and draw out the cash.  Really.  That is easy.  Most can’t. Here are some other ways with many variations and combinations: Seller financing – routinely with no less than 30% down and terms of up to 10 years with […]

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Business Sorrows

March 31, 2017 blog No Comments

I am often asked ‘is it better to start a business or buy a business?’  The answer is ‘it depends.’  It seems there are two entrepreneurial types – those that would only start a business and those who would only buy a business. There is risk and anxiety in both.  They both cost money, perhaps […]

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Typical Seller’s Process

November 28, 2016 blog No Comments

Everything we say is routine, turns out to have its own twists and turns.  This is true with selling a small business as well.  In this case, a small business is one that has perhaps $3,000,000 in annual sales.  It may not be so small to operate and certainly requires the ingenuity of the owner. […]

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Piercing the Veil

July 14, 2016 blog No Comments

Sylvia had been going great with her syndicated radio show. She had advertisers, 100 radio stations carried it. All was well until the one advertiser filed bankruptcy. Sylvia had been on top of it and had her business manager, just 45 days prior to the filing, collect $50,000 of the $100,000 then owed. She really […]

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When Should I Sell?

July 14, 2016 blog No Comments

Are We At the Peak of the Sellers’ Market? By Steve Raymond, The DAK Group | July 14, 2016 The past few years have been an excellent time for business owners to sell and this should continue for at least another year: interest rates are low, private equity firms and strategic buyers have cash to […]

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The Story of Rent

July 14, 2016 blog No Comments

Marco purchased his real property in Santa Fe in 1989 and paid cash. From there he operated his cabinet business and survived the various economic ups and downs, paying Marco a nice income for his spectacular work. The business was operated as a sole proprietorship and paid the taxes, insurance and utilities for the property. […]

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Have a System In Place Now

January 8, 2016 blog No Comments

Josiah had owned and operated the retail business for fifteen years.   He had a couple of staff members who had been with him, each for a minimum of four years. Then he got sick…   This was a clothing retail store. There was lots of inventory to manage and cash sales.   It wasn’t that […]

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The financing of business…

January 7, 2016 blog No Comments

Samantha had found just the right buyer. It really was kind of a miracle as this statewide business marketing consumables for national firms was not for just anyone. But Simon was perfect. He was living in central NM and had some experience in the industry, could work out of his house, while managing his invalid […]

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When there is no more room…

January 6, 2016 blog No Comments

Stewart owned a malt shop, the one his father started when Steward was just 10. The malt shop had a great location, had added sugar free, lower glycemic, and lactose-free options as these options became fashionable. What more…… He had added impulse items at the checkout and on stands in the middle of the floor, […]

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