The best time to sell is when a business is doing well. It is best not to wait until after a business has peaked; the selling price can suffer. However, almost any business can be sold, even if it is not doing well, if the sale is handled professionally and priced correctly.

A company's value depends on many factors such as: cash flow, financing terms, value of assets, type of business, financial history, condition of equipment and premises, lease arrangement on premises/equipment, competition, location, and future potential, among other factors. By analyzing your business and comparable sales in your industry, your VR Business Intermediary can advise you on the proper pricing strategy for your business. For larger businesses we recommend a third party valuation. Buyers are much more likely to pay top dollar for a business when documented evidence supports the asking price. Most financial institutions insist on a business valuation before they will consider financing.

What is the difference between the terms Discretionary Earnings, Cash Flow, Adjusted Net Income and Owner's Benefit? And what do they mean?

These terms tend to be used interchangeably but they are usually defined as profit before income tax plus depreciation, interest, owner's compensation and other owner benefits. It represents the amount of money the owner has available to pay himself, to invest in additional equipment, to make the note payments on the business and pay taxes.

Buyers always confirm the financial standing of a business during due diligence. Financial statements and tax returns need to be up-to-date and accurate before a buyer asks to see them. A buyer is not insulting a seller when he asks you to prove your numbers. He is only being a prudent businessperson. In addition to books and records, the appearance of your business is paramount. Buyers like well maintained equipment, clean facilities and current sellable inventory. Make it easy on the buyer to make a positive decision by making certain your business shows like a winner.

Just as you would not want your personal financial documents made available to the public, business owners want only serious buyers to have access to such private information. Your Business Intermediary will provide you with summary information including gross sales, general expenses, lease information and cash flow. He/she will assist you in drafting an offer based on that information and protect you by making the offer contingent on your satisfaction with the seller's business information upon your full investigation. An Offer to Purchase Agreement simply says, "If everything I assume about this business proves true, this is what I am willing to do." You, the purchaser, then have the right to proceed, withdraw your offer or make a new offer based on your investigation. The seller, once he/she has accepted your offer, must stand by those terms unless you and you alone choose to alter them.

You can't ever be completely certain. But consider this: a Buyer isn't likely to simply walk away from his deposit. In addition, we recommend that Sellers conduct their own due diligence on Buyers during the due diligence phase of a contract. This might include credit, IRS and reference checks. In addition, it's normal to request a personal guarantee from the Buyer as part of the security agreement in the Note.

Most owners find that the frustration, expense and time involved do not yield cost savings and many end up working with unqualified buyers. In fact, because they do not have access to a large number of qualified buyers, many owners end up selling their business for much less than they could have received by working with a well-established Intermediary. Plus, owners find it difficult to work directly with buyers while maintaining confidentiality. Selling a business is a specialized trade. It is prudent to seek professional assistance when it comes to selling an asset as valuable as your business.

Sellers benefit from the expertise provided by a professional business broker in various ways. One of the more significant benefits is the ability of the seller to spend their time managing their business during the selling process, thereby maintaining or increasing their cash flow and ultimately maximizing their sales price. Additionally, professional business brokers help sellers:

• Analyze the business, the marketplace and recommend a selling price.
• Create maximum exposure among buyers through broker networks, advertising and buyer contacts.
• Screen all buyers to avoid wasting time with unqualified buyers.