We love talking to potential buyers and sellers about what we do and how we do it differently than every other Business Brokerage out there. We've compiled a list of the most frequently asked questions that we get from customers. Hopefully this question and answer session will give you some insight into the things that you might be wondering about as well.
How To Value A Business For Sale?
Business valuations can be a tricky task, and everyone seems to have varying ideas of how to value a business. We've talked to sellers who have been told by their CPA that a business is always worth 3 times its annual sales revenue, or they've been told by a fellow owner in their same industry that they should be getting a certain dollar amount because their industry is "hot right now." The truth is that a business valuation really comes down to how well the individual business is performing. We offer free, confidential valuations to all sellers who are considering listing their business for sale with us, because if you don't know what it's worth, how can you make a rational decision about selling?
In the world of selling small businesses, we value businesses generally in one of two ways. The most common way to value a business is via a multiple of the Owner Benefit or Discretionary Earnings. We will look at your last 3 years of tax returns or Profit & Loss Statements to calculate your true Owner Benefit or Discretionary Earnings. From there, we research sold comparable businesses to get a realistic industry multiple. Using that multiple we will calculate the price that will give a business owner the most accurate estimate of value for their business. The second most common way to value a business is using the asset value. In this case, the value of the business is based on the fair market value of the tangible assets (equipment, inventory, etc) that the business owns.
If you're selling your business, ultimately, it's only worth what a buyer will pay for it. So, getting the pricing of your listing right is the key to finding a buyer.
If you'd like to get a FREE valuation of your business, please click HERE.
How To Price My Business For Sale?
Once we have an understanding of value, then we can strategically look at pricing your business for sale. We want to help you get the most for your business, but we also want to make sure that we advise all of our sellers as to what the most probable selling price would be, in order to set your listing up for success. At Green & Co. Business Brokers, we don't want to just list businesses for sale, we want to actually sell them for the business owners who have put their faith and trust into us. In order for us to get a successful sale, the listing price needs to be right from the start. There is also typically less negotiation room in a business sale, if the business is priced correctly, so there is no need to pad a listing price with lots of "wiggle room."
Pricing will also depend on how motivated you are to sell. The average business for sale is on the market for 282 days, so if you want to sell your business faster, it needs to be priced much more competitively that all of the other similar listings out there.
We will help to suggest pricing that reflects market value, as well as your goals and desires, and we will always do our very best to get you the best deal possible.
How Does It Work To Sell Your Business?
We get a lot of questions about how the sales process works. Here is a general overview of the main elements:
1) Business Owner wants to sell
2) Business is Valued
3) Business is listed for sale by a Business Broker and marketed confidentially through multiple methods, to potential buyers
4) Buyer Signs Non-Disclosure Agreement (NDA)
5) Buyer Reviews Confidential Business Review (CBR)
6) Buyer/Seller Meeting
7) Offer & Negotiation
8) Under Contract
9) Due Diligence
10) Lease/Commercial Real Estate Purchase
11) Loan Commitment
If you want to learn more about selling your business, we wrote an entire eBook on the topic. To download our FREE eBook, "Selling Your Florida Business: The How-To Guide" CLICK HERE.
When you are buying or selling with Green & Co. Business Brokers, we help you through each of the elements of the sales process. We are experts at selling businesses and we are very familiar with the process. Let our knowledge and expertise work for you.
How To Sell Your Business To A Competitor?
Sometimes competitors are the most qualified buyers that you’re ever going to find. Competitors are already business owners, which means they have verifiable finances and a vast reputation in the business community. Also, by selling to a competitor, you are selling to someone who can run your business properly, because they already have a similar undertaking of their own in the same industry that they are running too. So, they know the ins and outs of the market and how to bring in more customers. That way, you can be sure that you’re leaving your business with a buyer who isn’t going to run it into the ground as soon as you leave.
For the right businesses and industries, we will target competitors as potential buyers for businesses that we have for sale. Of course, this is done with the full buy-in and permission of the seller. If a seller would like us to confidentially search for a strategic buyer or competitor who’s possibly interested in growing their business via acquisition, then we have strategies and methods for testing the interest of competitors, without letting them know any details of the business that is actually for sale.
How To Purchase A Business?
At Green & Co. Business Brokers, we LOVE working with buyers. The majority of Brokers in our industry shy away from working with buyers, and they prefer to work with sellers. Because of that our buyers get the attention and care that they deserve. Did you know that working with a Broker to help you purchase a business is 100% free for a buyer? That's right...the seller pays the commission in a business sale transaction, and the Listing Broker splits the commission 50/50 with the buyer's Broker. Why not have a Broker in YOUR corner to get you the best deal possible?
If you are looking to purchase a business, first, find a great Broker to work with (it's free...you don't pay anything for their services). Then find a great business that peaks your interest. You will need to fill out a Non-Disclosure Agreement (NDA) for EACH business that you inquire about. Once that's done, you will receive a Confidential Business Review (CBR) or buyer's package with detailed information about the business that's for sale. From there, you might have questions that you'd like to ask the seller. That is the perfect time to have your Broker schedule a buyer/seller meeting. At the buyer/seller meeting, you should get your questions answered, and decide whether or not you want to move forward in making an offer on the business. Your Broker will work with you to write up the offer and submit it to the seller. The negotiation process then commences. If a meeting of minds is reached between buyer and seller, then you will go "under contract." Once that happens, Due Diligence starts. Due Diligence is your chance to ask in-depth questions, and request financial documentation to prove the numbers you were given on the CBR or buyer's package. If everything looks good, you will then move past Due Diligence and onto the other elements of the closing process. Your Broker will help to guide you through each of these elements. Hopefully you will arrive at the closing table and own your new business. You will be off on an exciting new adventure as an entrepreneur!
We also wrote an eBook for potential buyers, which is called "Buying A Business: The How-To Guide" and we'd be happy to send you one. Just let us know you'd like a copy.
How To Choose A Business Broker?
The best way to choose your Business Broker is to check out Brokers in the area. Don't limit yourself to just your immediate city, as Business Brokers often work a large geographical area of multiple counties. Look at their online presence. How does their website look? Are they in touch with what's happening with today's marketing technology? Do they have customer reviews posted? Are they advertising their business listings well? Then, we would always suggest to interview more than one Broker, to see which one is right for you. All Brokers are definitely not created equal, so ask them how they are different and what makes them the Broker that you should choose to work with.
If you are a buyer or seller, looking for a good Business Broker, we would appreciate the opportunity to earn your business.
How To Become A Business Broker?
All Business Brokers in Florida and California are required to hold a valid Real Estate License. The reason for that is because we do sell commercial real estate, if it is owned by a business that we are selling. You also need to have a background working with small businesses, and working with business financials, such as Profit and Loss Statements and Tax Returns. You have to enjoy working with people, and you also have to be good at thinking outside the box when problem solving. Experience working in sales is also a great asset for the contracts and negotiation parts of the sales process.
Interested in learning more about becoming a Business Broker with Green & Co.? Click HERE to learn more.
Do you have more questions or a specific question about your business or situation? Give us a call or send us an email, and we'd be more than happy to chat with you.