Preparing to Sell Your Business
VR is very knowledgeable about what it takes to sell a business. Preparing the seller and aiding the seller in preparing the business to achieve the maximum gain from the sale are two important roles of our professional Intermediaries.
People sell their businesses for many reasons including retirement, partnership disputes, personal relocation, family concerns, the desire for change, illness, or entering into another business venture, to name a few.
Knowing the reason for the divestiture aids your VR professional in structuring the most advantageous transaction.
VR turns to its’ professional alliances to help you maximize gain, whether it be financial or emotional. We can also refer you to our trusted business associates to help you seek the appropriate tax strategy, succession plan, or investment strategy to again help you maximize the benefit of the sale.
VR has identified these important items necessary to aid a successful transaction
- Provable Cash Flow: Buyers want proof of sales and profits the business has attained in the past.
- Expectation of a Reasonable Price and Terms: Educated buyers only consider competitively priced businesses.
- Updated List of Assets Including Furniture, Fixtures, and Equipment: A complete inventory that can be referenced during the inspection.
- Sufficient Term Left on the Lease or Landlord Agreement to Extend a New One: Knowing the terms of assignment or of a new lease.
- Best Possible Appearance of the Business: Having the business premises neat, clean and in good repair.
- Covenant Not to Compete: Preparing the terms of non-competition within an appropriate distance and for a reasonable period of time.
- Believable Reason for Sale: Buyers will want to understand the reason for sale and be comfortable that there is not undisclosed information that could negatively affect their investment in the future.
- Reasonable Turnaround Time for Additional Requested Information: At some point in the process, buyers will ask for updated financial statements or asset lists. It is essential that you move forward in a timely manner to honor these requests when a qualified buyer shows interest in the business.
- Full Disclosure in Advance: Most adverse situations, such as landlord problems, outstanding loans, tax arrears, unfavorable equipment leases, and even non-compliance with zoning, health or other regulations, can be overcome if known to your professional VR Intermediary and relayed to prospective buyers early in the process and can gravely hurt the buying process if disclosed too late.
How to Sell Your Business
Once an owner has made the decision to sell a business, we work with the owner at every stage of the selling process.
Many sellers will ask why a business is up for sale. Sometimes a simple “Other Interests” will raise suspicions with certain buyers. We will assist you in developing a good story.
The seller will need to gather accounting information, tax information, a copy of the lease, a list of furniture and fixtures. Sometimes, a buyer may need to spend money for accountants fees to develop financial information necessary to consummate the transaction.
But the most important thing in the sales process is for the owner to keep the business performance consistent. A potential buyer must be comfortable that the business will continue to do for him what it has done for the prior owner.
Finally, there is usually a training period where the owner is available to the buyer. This can vary based on the complexity of the business and industry.
Keep-in-mind that anything that increases sales also increases profits and the all-important cash flow!
Make it easy on the buyer to make a positive decision by making certain your business shows like a winner.