Selling Your Business

Planning the Sale of Your Business

Selling a business is not easy. First the business owner needs to know that this is the right time and that the process of selling a business takes time (up to a year or more). The business owner also needs to know that the sale of a business needs to be done in a very confidential manner that does not affect current business including customer and employee relationships. Potential buyers for Main Street businesses like restaurants, convenience stores and franchises can often be developed using popular websites like BizBuySell. However, B2B companies require a more strategic approach.

Technical and specialized businesses including design, medical and service firms generally require that a potential buyer has related business experience. To find these potential Buyers requires a Strategic Approach for the sale of your business. EBA specializes in the sale of small-medium businesses requiring a Strategic Selling Approach.

Strategic Selling Approach

Edge Business Associates provides the following:

  • Edge Business Associates (EBA) will provide the seller a NO COST “Estimate of Value” of the seller’s business using a Discretionary Cash Flow approach.
  • Edge Business Associates will also provide the Seller a copy of “Preparing to Sell Your Business.”
  • When the Seller engages EBA as their business broker, we will sign a One Year Listing Agreement with the Seller where there is agreement on the selling price for the business
  • EBA will then create a Confidential Business Review (CBR) for the Seller business based on a range of documents including the last three years of tax returns, web site and other information from the Seller.
  • The seller will also complete a series of questions on forms prepared by Edge Business Associates which are based off this CBR
  • EBA will place the ad information (without any specific information of the seller name and location) on multiple web sites including ones like BizBuySell.
  • Interested Buyers will need to sign a Confidentiality Agreement before receiving the CBR
  • EBA will set up conference calls and face-to-face meetings between the Seller and the Buyer to answer any additional questions the Buyer may have.
  • The next step will be to have the Buyer sign a Letter of Intent (LOI) with a refundable retainer to allow full disclosure of the business and Income Tax information. A lawyer does not need to be involved at this time.

Technical and specialized businesses including design, medical and service firms generally require a much more comprehensive approach for locating potential buyers. Most of these Buyers will not likely be in an active mode looking to buy a business. To find these Buyers requires an active effort by the Business Broker to locate and interest the potential Buyers.

As part of the Strategic Selling Plan, Edge Business Associates will outline the unique approach that we will use for each strategic selling engagement. This will include an understanding of the market and knowing the strategy to target the best Buyers.

Considerations in the Strategic Selling Approach Includes

  • Who some of the key strategic Buyer targets
  • How these strategic Buyers will be contacted (personal letters, emails, phone calls)
  • How many strategic Buyers will initially be contacted
  • How Edge Business Associates will perform due diligence in both assessing the interest, ability to buy and relative probability of them buying
  • How Edge Business Associates can assist the Seller in identifying the best potential buyers
  • Edge Business Associates will present all qualified Buyer candidates to the seller
  • How to insure confidentiality with respect to customers and employees
  • Best approach for buyer financing
  • Getting approved SBA lenders
  • Lawyers, CPAs, etc.

Edge Business Associates is the best intermediary to ensure that relations between the Buyer and Seller stay intact during the transaction process.
Buyers may choose to pay for the business at the closing or use the Transition Approach to buy based on performance payments to the principal seller over a specified period (3 -5 years or more after the initial sale).

The Transition Approach significantly reduces the risk associated with the Buyer paying everything up front. It insures that the knowledge and customers of the seller are smoothly transferred. The Transition Approach can significantly increase the sales and profitability of the Seller business when additional resources (financial, selling, marketing, technical, support) are applied to the business. It also offers the Seller the opportunity to significantly increase the sales price for the business.

For more information about Selling your business, contact Hank Allard at Hank@EdgeBusinessAssociates.com