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| Thinking of Selling?
You have 3 Options |
How would you go about selling your business? You
have about 3 options:
- Sell Yourself:
You can sell your business on your own through a
network of business associations and contacts
Issues:
Listing and presenting your business properly. Don't
forget that you need to manage your day-to-day operations
at the same time you are selling your business.
Your challenge is to present your business to a
vast network of potential buyers from around the
region and country.
- List Your Business with the Media:
You could publish a small ad in targeted media plus
list your business with online business-sell networks.
Issues:
Same as the first option. Plus, you have the challenge
of keeping your sale confidential from your competition
and employees.
- Sell Through a Professional Broker:
Let an expert prepare the necessary documentation
and find qualified buyers. Plus arrange all related
meetings to close the deal.
Issues:
Cost. Professional brokers perform services based
on percentage of the closed sale. But those payments
are generally re-coup since the broker understands
the dynamics to maximize your value.
There are pros and cons for each method used.
Our advice is as follows:
Inside This Guide
Regardless of your selling method, the process of
selling your business is same. You will need to:
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| First Task, Put It
Down on Paper |
You need to bundle everything that is for sale and
present it in a professionally designed, bounded
sales sheet (what the industry refers to
as the Confidential Memorandum).
The industry uses a standard format
for the sales presentation that is available by
calling the Novars Group at:
Finalizing the Sales Presentation Sheet is
critical before listing or announcing that
your business if for sale. The time to complete a
sales presentation can vary by company and depends
on the quality of your financial statements.
- If you are not interested to sale your business
at this time, it is advisable to complete
a DRAFT of your sales presentation and to
keep it updated annually.
Why? You never know when a prospective buyer suddenly
announces their interest to buy your business. The
speed to act quickly can make a difference.
If you choose to sale your business on your own,
you may request the services of the Novars Group to
assemble and prepare your sales sheet for a negotiated
fee. Our services will include:
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the collection and review of the
required financial and marketing information,
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an analysis of your financial statements
with a recasting for deriving market value,
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an analysis of your cash flow position
to support your company asking price,
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and if desired, a complete valuation
report by an independent valuation firm to substantiate
the numbers that support your company worth.
Call us for a FREE consultation at: 703-319-1565
or forward us a
quick email on when we may contact you.
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| There are a Number
of Biz-Sell Online Networks |
Once you have completed the sales presentation, you
are ready to list your company via a network of business
buy/sell opportunities.
Some samples:
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local print media
- regional or national print media (to reach a larger
buyer network)
- business brokerage network
- online business buy and sale networks
- business associations
- business contacts
If you use any of these options, we strongly advise
you to setup a third-party contact to keep
your sales intent confidential. Your competition
may read the same listing services and note that you
are for sale. This gives them a reason to move against
your market when you need to be at market strength.
What Can a Broker Do
The advantage of the Novars Group is that we function
as your 3rd party contact — listing
and representing your interest with complete confidentiality.
We can also list your company via our extensive experience
with offline and online media:
Some of our networks include:
In addition, we can:
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target specific companies
or competitors who may have an interest
in your business (under complete confidentiality)
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contact equity companies
that invest in business ownership with
respective management teams.
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other: as directed by you
No other business brokerage unit within the Northern/Central
Virginia area can prospect customers with this much
exposure.
So when you are ready to sale your business, extend
your reach using our network of prospective buyers
nationwide.
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| Screen and Qualify
Your Buyers Before the Showing |
Once a prospective buyer has inquired about your
business, you will present them with the
Confidential Memorandum (sales presentation).
Some issues:
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Is the prospective buyer qualified
to make the purchase? Don't waste time with
individuals who lack the qualifications
and financing to take over your business.
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Who should view your Confidential
Memorandum? The information is extremely
confidential. Don't present your
company information to any person.
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Who should you allow to come
visit the company? You can't risk the exposure
by opening your company books unless
the prospective buyer has signed an Intent
to Buy Agreement.
What Can a Broker Do
One of the most important services of a broker
is finding and screening prospective buyers.
We screen each buyer to ensure their objectives
meet your objectives. We review their financials
to ensure they have the capacity to enter into a
buy agreement.
Our commitment is to present pre-qualified
buyers who have the interest, commitment and finances
to close the deal.
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The buyer will review the Confidential
Memorandum and field some questions through the
broker. They will have questions related to financial
projections and the marketing strategy.
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If the buyer has interest to pursue
this business, they will sign an Intent
to Buy Agreement. They may agree to the
offer price or counter-offer with another figure.
The seller will have option to agree or disagree
with offer. Many times the broker will negotiate
the final offer between the parties.
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The Intent to Buy Agreement
is binding upon completing a due diligence of
the business. The buyer will not sign
the Intent to Buy unless they are serious about
completing the transaction.
The advantage of a broker is that we manage
the sales process while you operate your business.
Your play in the game is when the buyer visits the company
to complete a due diligence. At that time, you have
a prospective buyer who is serious about buying your
company.
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| Company Visit by the
Buyer |
The buyer will perform a due diligence on the business
prior to closing. He or she will examine the books,
check the facilities and inventory, review the records
to confirm the representations made by the seller,
and interview the owner on the market strategy.
Two highly important objectives must be
met during due diligence:
- Keep the process moving —
you don't want delays. We keep prospecting for
buyers until the deal goes through.
- Assigning someone as the point person
to address issues between the buyer and
seller.
What is Due Diligence?
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| Enter Into Closing |
After a successful due diligence, the buyer will
move to close the deal. This is the process that involves
several parties, including:
- closing attorneys:
this may involve an independent closing attorney
representing both parties; usually the buyer and
seller will have their respective attorneys involved
to review closing documents.
- financing lenders:
generally the buyer may require financing from a
lender or other party.
- others:
respective parties such as your broker.
The closing may require agreements on several fronts:
- how will the buyer finance the purchase:
if the buyer is doing an outright purchase (either
through an investment or lender financing), this may
not be an issue. But in many cases, you will find
that the buyer may require seller financing.
This involves you financing a portion of the purchase
under negotiated terms of 5-10 years. This is not
a bad option, since it will give you the right to
assume back the business if the buyer fails to meet
their payment obligations.
- will the seller remain with the company
during the transition:
it is common for the seller to assist the buyer during
the transition. This is particularly common if the
business have distinct customer contracts or brand
name recognition.
You need to negotiate with the buyer your role, the
time required for the transition, and fee. In most
cases, the seller will receive a per diem
fee for assistance.
- non-compete clause:
in some cases, the buyer may request a non-compete
clause that prevents you from competing against the
buyer for a period of time (usually 1-2 years).
- use of your brand name:
if you business success carries the name of the seller;
i.e., Smith's Auto Parts, the buyer may negotiate
a period of time where they can continue to
use your name while they build up the new brand.
This may involve joint name in the brand: Smith &
Wesson
to be followed by: Wesson & Smith
to be finalized by: Wesson
Again, this may involve a year or more and is generally
included in the goodwill price of the company.
- other:
there are many other issues that may require representation
from a broker to protect your interest.
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| How We Can Help |
This is your ultimate goal — transferring ownership
to the buyer. Money exchanges will take place. Contract
agreements begin to take effect.
This is the role that we can play — preparing,
listing, presenting, negotiating, and closing the
sale of your business. Get the professional advice
you need to manage this process.
For more information: click
here
The Novars Group is a professional business brokerage
operation with expertise in business transfer and
sales. Our services include:
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