—————CALL 800-905-1213 TO BUY OR SELL YOUR BUSINESS ————–
It takes 7.2 months on average according to bizbuysell.com to sell a business if the rights steps are followed. The major steps can be broken down into 1) Pricing the business correctly, 2) Preparing key documents, 3) Marketing, and 4) Managing the due diligence process.
PRICING
- Most small businesses sell for two to four times seller discretionary earnings plus inventory.
- A company is more valuable if the business is not dependent on the owner for continuing sales.
- The most desirable businesses will be ones that can run without disruption in the absence of the owner.
- The health of the industry will impact the ultimate value of the company.
DOCUMENTS BUYERS NEED
- Three most recent years of tax returns
- Balance Sheet
- Profit and Loss Statements
- Equipment List
- Inventory
- Lease Agreements and all agreements that will be in force after the sale
FINDING THE BUSINESS
- You must search as many places as possible to get the deal flow. www.bizbuysell.com, www.businessforsale.com, and www.bizquest.com are among the many businesses-for-sale websites that you can research companies for sale.
- Social Media should be used to locate business owners interested in selling their company. Set up social media accounts and engage with business owners and thought leaders to help uncover business opportunities. Allows business owners to maintain confidentiality and let them know you are happy to sign a non-disclosure.
- Databases should also be used to market your business. You can buy a list that targets people most likely to buy your business. You can target potential buyers by geography, industry, experience, age, and other criteria.
DUE DILIGENCE
Due diligence is the most critical stage in buying or selling a business. This is when the buyer will inspect the company and determine whether all representations are accurate. This is like a home inspection when the home’s condition is reported. House inspections are rarely perfect, and no business will be perfect either. The issues discovered in due diligence may be minor or significant but can usually be resolved by both buyer and seller making reasonable accommodations. Most small businesses are unique and reflect the owner, so they may be hard to value.
