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Tuesday, June 23, 2015

Explore Your Selling Opportunities

Michael Langford
Michael Langford
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I recently met with a business owner who, because of health problems, wants and needs to sell his business. He has a key employee that supervises much of the work that is performed by the company. He offered to sell the business to the employee, and they agreed on a price, with the seller carrying a note for roughly 30% of the price of the business. The employee's only contingency was raising the necessary down payment from family members. As time went by it became clear that the employee was coming up short on the down payment. So the deal fell apart. The seller had some bitterness due to "wasted time" with the employee, however, he needs to keep the employee - a supervisor - motivated, and to continue to do his job. The owner's illness limits his active-time involvement at the business, and the supervisor is critical to the continuity of service.
The Seller called me to determine if enlisting a broker is the most efficient way to sell the business. The answer is "no" and "yes". The seller already has a potential buyer who wants to buy, but is having some trouble with the financing. That employee/buyer is the MOST efficient way to sell the business, however, lacking a real buyer, then of course, hiring a broker to handle the marketing and solicitation of offers is the most efficient way to sell.  
My advice to the seller is to attempt to revive the conversation with the employee. "Work out the financing details if you can, because this buyer already has the knowledge and desire to buy and run the business. You are in a hurry because of your health. Double the efficiency of the selling process by hiring me, AND pursuing the Employee for a sale. I will exclude that employee for a period of 30 days from my listing, if you make a deal in that period, then no fee will be due. But you won't lose any time getting the business to market if the Employee won't or cannot execute on a purchase".


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