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.
- 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.
- With Seller input, I create a marketing package and terms for the seller’s approval.
- 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