What to Expect from the Sales Process
Because our business brokers understand that this can be a somewhat unfamiliar process for you, we make it a point to teach you about the sales process before you begin to actually sell your business. As part of this learning process, our brokers will discuss many of the things that you can expect. A few of the items that we will go over with you include:
- Confidentiality Agreements: Selling your business is entirely unlike selling your car or your house. You cannot put out a for-sale sign or openly advertise your sale publicly. You must maintain a discreet sale. This means confidentially marketing your sale (which we can do for you), telling no one about your sale until the sale is closed, and requiring anyone with knowledge of your sale to sign a confidentiality agreement. Taking these steps to maintain a discreet sale is incredibly important, as failure to do so can have serious consequences.
- Dynamic Business Valuations: When our business brokers appraise your business and provide you with an estimate of your business’s value, you must remember two things. First, this is only an estimate, and that the actual value of your company depends on what a buyer is willing to spend in the open market. Second, many internal and external factors could have an impact on your company’s value, and they are constantly changing – meaning, your company’s value will probably change over time.
- Buyer Training: Almost all business sales will include a clause in the sales contract that requires you to train your buyer for some period of time. The specifics of this clause will vary from one sale to another; however, it is important that you are prepared to complete this obligation. The purpose of this training period is to ensure that the transition from one owner to the next goes as smoothly as possible without affecting your company’s productivity.
- Non-Competes: The majority of sales contracts will include a clause that requires you to sign a non-compete. A non-compete agreement is a contract that prohibits you from opening another business that is in competition with the business that you are selling. The terms of this contract will vary from sale to sale, but you should be prepared to sign one of these contracts.
- Negotiating with Buyers: When you discuss your sale with prospective buyers, they will expect to negotiate with you. For this reason, buyers will often make a low initial offer. It is important that you understand that they are expecting to negotiate with you and to be prepared.
- Seller Financing Options: Although you will never be required to finance your own sale, there are many advantages to doing so. So if you have the means to finance your sale, it is something worth considering.
Avoid These Common Seller Mistakes
In addition to teaching you about what to expect from the sales process, our business brokers also work to teach you about common seller mistakes. By making you aware of the mistakes that are commonly made by other sellers, we are taking steps toward preventing these same mistakes from being made during your sale. Some of the common mistakes that our business brokers will discuss with you include:
- Taking negotiations personally.
- Telling your employees that you are selling your business before the sale is closed.
- Working with unqualified buyers.
- Failing to make it clear to your buyers which assets are included in your sale.
- Failing to consider the tax ramifications of selling your business.
- Refusing to maintain a level of flexibility with the way you view your company’s value.
- Failing to be accommodating to your buyer.
- Failing to prepare for your sale before you enter the sales process.
Business Brokers of Lexington, Kentucky
At the Lexington, Kentucky, office of Morgan & Westfield, our business brokers work exclusively with the business owners of our local communities. We place a particular emphasis on working with business owners in the communities of:
Lexington, Versailles, Alton, Anderson City, Lawrenceburg, Cornishville, Salvisa, Pinckard, Keene, Nicholasville, Wilmore, Vineyard, Shakertown, Burgin, Harrodsburg, Bryantsville, Danville, Lancaster, Buckeye, Kirksville, Paint Lick, Richmond, Brassfield, Winston, Waco, Bybee, College Hill, Ford, Colby, Pinchem, Westbend, Winchester, Jeffersonville, Camargo, Mt Sterling, Judy, Clintonville, Sharpsburg, East Union, North Middletown, Millersburg, Paris, Colville, Centerville, Shawhan, Cynthiana, Connersville, Sadieville, Georgetown, Stamping Ground, Peak Mills, White Sulphur, Midway, Millville and Frankfort.
By exclusively serving these communities and the neighboring communities that make up this region, our business brokers have developed a unique understanding of the dynamics of this marketplace. This market knowledge coupled with our brokers’ hundreds of years of combined experience in facilitating business sales enables us to facilitate hundreds of successful sales each year. To learn more about how we can facilitate your business’s sale, contact the Lexington, Kentucky, office of Morgan & Westfield today.