The Complete Guide to Selling a Business email series is divided into 10 modules and takes readers through the following steps:
1) Preparing for the sale
2) Valuing your business
3) Financing the sale
4) Finding and working with a broker
5) Attracting buyers
6) Screening buyers
7) Meeting with buyers
8) Negotiating and accepting an offer
9) Preparing for due diligence
10) Closing the sale
The following is a brief synopsis of the 10 modules:
- 1) Preparing for the sale
In this first module, you’ll learn about the required steps and approach that Morgan & Westfield takes to prepare your business for the sale. This preparation is a helpful step in not only selling your business, but selling it for a healthy profit. We also show you how to sell to a buyer who will carry on the traditions you created over the life cycle of your business. Finally, this module discusses the importance of preparation and how it has a strong impact on what kind of transaction takes place.
- 2) Valuing your business
The experts at M&W believe that objective professionals are the best ones to value a business because they can set aside emotional attachments and evaluate your business with the objectivity of an unbiased third-party professional. This isn’t a time for emotion and sentiment; this is about your bottom line.
- 3) Financing the sale
According to industry statistics, 80 percent of small business sales include some form of seller financing. The amount a seller finances is often low ― 10 to 20 percent of the sales price. This module focuses on financing deals for less than $10 million. Knowing how to finance the sale of your business will help you achieve your desired goal ― a prompt sale.
- 4) Finding and working with a broker
The professionals at M&W understand that selling your business is the single most significant event in your business career. Business transactions can be intimidating for even the savviest business people. M&W has honed the process of selling a business into the proven, time-tested M&W 4-Step Method for selling a business.
- 5) Attracting buyers
Morgan & Westfield’s greatest strength in the industry is our proven ability to get your business in front of as many qualified potential buyers as possible. We do this by developing winning marketing strategies and finding the right buyers in target markets for your industry and geographic region. This strategy of finding, attracting, reaching and screening potential buyers is key to maximizing your return on investment. This requires an approach that is both strategic and proactive.
- 6) Screening buyers
When selling a business, learning how to distinguish between the tire kickers and the serious buyers will move you closer to a sale ― the desired goal. Many seemingly interested buyers are just window shoppers who just want to see what’s out there. You must weed through them to find the serious buyers ― those with genuine motivation and a real desire to strike a deal. With the economy on a strong upturn, the number of legitimate buyers is increasing. There’s more capital out there and more people who are looking for a sound investment.
- 7) Meeting with buyers
The sales process is like a dance, a mating ritual of sorts. The buyer wants your business, while you’re looking for a certain price. You and the buyer can learn a lot about each other at this stage. The information you provide to the buyer helps them decide if the business makes sense to them. At the same time, you’re able to decide if the buyer is qualified to make the purchase. After you’ve advertised your business for sale, prescreened buyers and identified qualified buyers, what comes next? The next step is simple — wait for buyers to contact you. It’s normal for buyers to call or email you if they have questions or if they’re interested in buying your business. However, you can take a more proactive approach by calling buyers and introducing yourself when you send your Business Summary. If you don’t hear back, you can follow up with the buyer We recommend making this contact three to five days after you receive their first inquiry.
- 8) Negotiating and accepting an offer
At this stage of the M&W 4-Step Method of selling a business, we should further qualify the buyer before entering negotiations and evaluating an offer.
We tactfully ask the buyer to submit the following:
- Personal financial statement
- Buyer disclosure statement
- Buyer profile
We can ask the buyer for this information before we begin preparing the offer, or we can stipulate in the offer or purchase agreement that the buyer will provide this information within three to five business days of acceptance of the offer. This effectively makes the due diligence period mutual, which allows you to cancel the offer if we don’t qualify the buyer. This is an important strategy that can save you from spending time negotiating with buyers who aren’t qualified.
- 9) Preparing for due diligence
After a buyer makes an offer on your business, you’ll set up a time frame for them to research your business further. This period, referred to as due diligence, normally lasts 30 to 60 days. During this period, the buyer verifies specifics of the business while the seller evaluates the buyer’s ability to finance and acquire the business. Due diligence can take any period of time, if both you and the buyer agree to it. The typical due diligence period for small to midsize businesses is 30 to 60 days.
- 10) Closing the sale
Closing the sale on your business will be like making the final ascent on Mt. Everest. It’ll come with strong emotions and a profound sense of accomplishment. Remember, it’s likely the most important financial transaction you’ll ever make. Don’t try to do it without the help of experienced professionals.
Are you ready to close on the sale of your business?
Get help. Period.
One small mistake can cost you tens or hundreds of thousands of dollars. You can have an attorney handle the sale, or you can contact Morgan & Westfield to guide you through this critical step. Business owners often approach us to seek our help with the closing on the sale of their business. They realize the stakes involved and don’t want to get tripped up with the summit in sight.
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