What are the 7 Critical Points You Need to Know
Before You Sell?

Validating A Realistic Sales Price. Realistic pricing is perhaps the most important factor in selling from a point of strength. The pricing of a business, different from the simpler means of valuing based on goods or services, depends on industry-tested valuation techniques, with tangibles and intangibles incorporated to ensure that the business will not be under priced.

The price of a business is arrived at by a variety of factors. While the decision to buy is based on tangibles and intangibles, one of the key factors is the buyer’s intensity of interest in a particular business. A Broker is an expert in placing a realistic price on the business incorporating both intangibles and tangibles.

You must realize, a Broker is not a magician who can sell an overpriced business. There are some Brokers who just can’t bring themselves to tell you that your price is too high. Don’t shoot your Broker for what you consider to be the “wrong” price and don’t choose your Broker on the basis of which one quotes you the highest listing price. Your business needs to be priced realistically.

A Broker has extensive experience and knowledge to accurately price a business at a level that is achievable. While Brokers substantiate the true value of the business, most importantly, they help prospective buyers understand the reasons for such value and structure a sale for the maximum benefit of the buyer and seller. Nothing can be worse than putting a business on the market that does not attract buyers because it’s priced too high or too low. It can not be said enough, a fair market value pricing is key to the successful sale of a business.

Current Knowledge of the Marketplace. Brokers surround themselves with databases, search tools, industry reports, business contacts around the world and maintain an extensive network of Brokers that are similarly connected. Brokers are connected to thousands of other Brokers, purchases and sellers all at a given time. You should understand that the arena that a Broker comfortably dwells, that being a daily presence in the marketplace, serves as an instrument in determining what a business will sell for.

Confidentiality is Essential. It is imperative that an owner understand why confidentiality is important to the successful sale of the business and what can happen if a sale is pre-maturely announced.

Confidentiality is important for a number of reasons. Customers, competitors, employees, vendors and creditors all will have different reactions to finding out that your business is for sale.

Prospective buyers often react negatively to a business opportunity that has not been kept confidential.

Realize, the sale of your business will be held if strict confidence by your Broker, not only because he owes you a fiduciary duty to do so, but also to maximize the sale potential. That protects your company from competitors, employees, customers, suppliers and bankers from learning of your intentions. Any premature indication of a possible change in ownership could discrupt these relations an weaken the company’s competitive position. For these reasons, confidentiality is critically important at all stages.

Expertise in Attracting Serious Potential Buyers. 80% of prospective buyers are individuals who want to control their own future. Many of them will be moving into the area from other states and countries. A Broker is in continuous contact with all categories of buyers using efficient and effective search procedures to find and screen those that are best qualified to buy.

”Blind” ads and listings are used. A “blind ad” is an advertisement that camouflages the identity of the business. A “blind listing” is a camouflaged description of the business in a multiple listing database. The goal of any business opportunity ad is to attract buyer prospects.

When the identity of the business is guarded, the ad is cautiously worded.

Brokers Have A Huge Advantage Over Other Professionals When it Comes to Listing and Representing a Business for Sale.

The Broker typically has many businesses for sale which attract prospective buyers. Prospective buyers respond strongly to ads which indicate that the Broker has a wide variety of business opportunities, even if the individual business descriptions are vaguely worded. The Broker is experienced at mixing and matching prospective buyers and listings. A Broker will determine and match up the right buyer for the right business focusing on prospects that are financially qualified and are genuinely interested in your type of business.

Brokers conduct all the due diligence on prospect buyers to weed out “tire kickers” and bring those serious buyers to you for consideration. During the early stages, while a buyer is still considering making an offer, the Broker is the ideal person to follow-up and keep the deal running smoothly.

Pre-Arrange Lender Financing. Surveys have shown that sellers who ask for cash receive, on average, only 75% of their asking price, while sellers who accept terms typically receive 86% of their asking price.

In many other cases, businesses that are listed for all cash just don’t sell. With reasonable terms that a Broker and lender resolve before locating a potential buyer, the chances for sale increase dramatically, and the time period from listing to sale, greatly decreases. Most sellers are unaware of how much interest they can generate by financing the sale of their business. What’s more, seller financing tells the buyer that the seller is confident about the ability of the business to pay for itself.

Untangle the Red Tape. A Broker is an expert at alleviating any and all potential pitfalls an owner may not even think about prior to selling a business. For example some potential pitfalls may include but are not limited to: permits, licenses, financing, blemishes, agreements, leases, etc. When a buyer has interest in your business, the Broker qualifies, interviews and conducts due diligence of that individual’s background, goals, objectives and financials.

Expert Negotiator. The Broker is equipped with negotiation experience that increases your chances of a sale. A Broker will uncover the bargaining power of the buyer and discovers at the outset how that individual plans to finance the purchase of your business. In addition, the Broker will anticipate the buyer’s concerns and counsel you about being up-front about any problems that might make a buyer suspicious and unnecessarily adversarial during the negotiation process.

Steeped in knowledge about negotiating price, terms and other vital aspects of the sale, the Broker will guide you each step of the way. A Broker acts as the “middle man” and can get your thoughts across, keeping you at a distance from the words themselves.