Q: How long will it take to sell my business?
A: The time needed to sell your business depends on a great many factors, including the price of your business, the type of business, your willingness to finance all or part of the purchase price and market conditions. On average, it takes 60 to 180 days to find a buyer and consummate a sales contract. Obviously, reasonable pricing and flexible terms tend to result in faster sales. Your LIBERTY BUSINESS ADVISORS business broker can explain how your business fits into these general guidelines.
Q: How will my business be advertised?
A: We first market your business to our large database of qualified buyers. We advertise on the Internet, via the LIBERTY BUSINESS ADVISORS site and several other business listing sites, giving your business exposure to hundreds of thousands of Internet users. Many buyers will relocate for the right business. We may run “blind” advertisements in the classified section of the local newspaper. To ensure your confidentiality, all marketing excludes any specific identifying information on your business.
Q: How will I be protected on financing I provide to the buyer?
A: The closing escrow agent can prepare a promissory note, a security agreement and will file a UCC-1 financing statement with the appropriate state and local agencies. It is much like financing a car – the lien can be recorded in the public records and the assets listed on the UCC-1 can not be legally sold or refinanced without your permission.
Q: Will the buyer pledge any additional collateral for my loan?
A: Buyers do not typically pledge additional collateral for your loan. When a buyer buys a business, he/she does so based on the business being able to generate sufficient cash flow to pay your loan and provide him/her with an income to meet their needs. When you ask for additional collateral, you are sending a negative message to the buyer: the buyer has paid too much for your business and the business will not generate enough cash flow to pay your loan and provide adequate cash flow to the buyer.
Q: What types of offers should I expect to receive?
A: An astute buyer is going to structure the initial offer to insure that they get the best possible price and terms from you. Therefore, you should expect to receive a low initial offer. Don’t be offended – this is normally just an initial offer to “test the waters.” It’s the first step in the negotiation of an appropriate purchase price for your business. All offers will contain some important contingencies, including review of the financial books and records of the business, obtaining a satisfactory lease and agreement on training and transition periods. Other contingencies specific to your business may also be included. Contingencies are normal and provide the buyer with the opportunity to verify the information presented in the marketing materials.
Q: How long is the training period for the buyer?
A: Generally, you will be expected to provide two weeks to two months of training in the business with equal time of telephone consultation. Remember, if you are financing any portion of the purchase price, you still have an investment in the business, so properly training the buyer is in your best interest.
Q: Will I have to sign a non-compete agreement?
A: Yes. Generally, the non-compete agreement covers the area from which your current customers are generated and the time period commonly equals the term of the financing you are providing to the buyer. For example, if your customers come from a 20 mile radius of your business and you are providing the buyer with a five year loan, you will be asked to sign a non-compete agreement for a five year period, covering a 20 mile radius from your business.
Q: When should I tell my employees about the sale?
A: Although it sounds harsh, our considerable experience has proven that it is best to tell your employees about the sale immediately before or immediately after the sale is complete. Of course, if there is an employee whose expertise will be needed after the sale, you should introduce the buyer to this employee shortly before closing. Your LIBERTY BUSINESS ADVISORS business broker can assist you in determining the timing for notifying employees.
Q: Does LIBERTY BUSINESS ADVISORS Inc financially qualify the buyer?
A: No. We usually ask for a personal financial statement from the buyer, but we do not verify that the information submitted is correct. If you desire, we can run a credit report on the buyer, as long as the buyer consents and pays a modest fee. Other than the credit check, it is your responsibility to do whatever you feel is appropriate regarding qualifying the buyer. If you are financing a substantial part of the purchase price, you should verify income, asset and liability information as carefully as a bank would. We have some SBA forms that will help you accumulate the necessary financial information about the buyer.
Q: What can I do to help sell my business?
A: As LIBERTY BUSINESS ADVISORS begins the process of selling your business, there are certain things you can do to help us.
- Keep normal working hours.
- Make sure your financial records are an accurate reflection of revenues, business expenses and assets/liability levels.
- Conduct business as usual. Do not let inventory levels dip below normal.
- Keep the business clean and in good repair.
- Remove equipment or furniture that is not part of the sale.
- Provide us with required information in a timely manner.
- Be as accommodating as possible in setting appointments to meet with buyers.