Prepare to Sell Your Business

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smaal business doesn’t mean that you wil have little amount of profit.Internet sales sites, such as BizBuySell, BusinessMart, and BusinessesForSale, offer online marketplaces for business and franchise sales. Many of them provide advice on selling a business, calculators for pricing your business based on your financial data, and lists of comparable businesses and what they have sold for recently in your region. Most of these do-it-yourself sites charge nominal fees—under $100 a year—to list your business. Some of them offer premium services for slightly more money and also include directories of business brokers.

Selling on your own will save you the 5 to 10 percent sales commission you are likely to pay a business broker, so at least there’s very little to lose starting out this way. Make sure any site you sign up with guarantees that your listing will remain confidential: There’s nothing worse than word getting out prematurely to your employees and clients that you’re thinking about selling.

That said, online sales sites probably work best for franchises and small retail outlets such as dry cleaning shops, gas stations, and restaurants. These are straightforward concepts that are fairly easy to value and will appeal to a wide audience of individuals who want to own their own businesses.

If you’re selling a unique business, in a niche market that requires more technical or industry know-how, you may be better off paying a commission. Brokers offer higher sales prices than you’re likely to get on your own, plus personal attention, contacts, and expertise in your industry, says Gregory Caruso, a business broker and valuation expert at Harvest Associates in Annapolis, Md.

“The only way you really know you got the best price is to invite everyone to the table,” Caruso says. “Recently we were brought in by a client that already had an offer 50 percent over what our financial evaluation said the business was worth. We were able to increase the price by another 25 percent by finding a second buyer.”
Auction Environment

While that is a best-case scenario, it’s not unusual for business brokers to be able to create an auction environment for a desirable business, he says: “Multiple letters of intent will create a fear of loss on the part of buyer prospects, strengthen your negotiating position, and increase the price.”as the demands increases sypply wil asl increases.

Look for a broker who has done transactions with businesses in your industry and has at least five years’ experience. Get references to former clients and check them personally to make sure they were satisfied with the process and the final sale. “You must be able to trust your broker, as there will be times in the process you will not like what they have to say. If you do not trust them, you will never listen and neither you nor the broker will really make the most of the opportunity,” Caruso says.

Look for a broker who has the professional designation “Certified Business Intermediary” if you’re selling a small business or “Merger and Acquisition Master Intermediary” if yours is a midsize company, says Stanley D. Crow, president of S.Crow Collateral Corp., a brokerage in Boise, Idaho.”Work with a business broker who is a member of the International Business Brokers Assn.,” he recommends.

Choose a business broker who will work on a contingent-fee basis, so that the broker is only paid if and when the business sells, Crow says.

In addition to searching broker databases online, you can get personal referrals to brokers in your area from your accountant, financial planner, or attorney. Investment bankers are another good source for referrals, Caruso says.

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