Selling an established business is a process that I am intimately familiar with and that I can help guide you to a profitable conclusion. Below are the answers to frequently asked Questions (FAQs) about the process of listing, marketing, and ultimately successfully transferring a business to new ownership. Feel free to contact me at anytime if you have any questions about the selling process.
- Faqs Sellers
- 1. How how much is my Arizona business worth?16.11.15
What is my business worth today? This is by far the most frequently asked question I receive and I will absolutely be able to help you answer it confidentially at no cost or obligation.
There are a number of different methods or guidelines for valuing a small business for the purpose of sale. These methods are dependent upon a host of variables that are unique to each individual business. I generally use a combination of methods including a multiple of the sellers annual discretionary cash flow (what you take out of the business as an owner including perks) and a analysis of current market data, and comparables of similar businesses sold.
Your best bet is to contact me now (call or text - 602-292-0553) to arrange a free confidential consultation. After I have a thorough understanding of your business model, its history, a chance to review current and at least 2 years previous financial statements. I can then assist you in determining a supportable asking price which should result in a sale. If you like, you can also submit a free business valuation form here on this site to receive a preliminary valuation.
- 2. When is the right time to offer my business for sale ?16.11.15
If you want to maximize your return on your investment the best time to offer your business for sale is when the business is growing and profitable. Buying a business is a major leap of faith for most buyers to begin with. Investing in a business that has declining sales or other mitigating factors such as new competition only makes it a bigger challenge to get a qualified buyer to move forward.
It takes a tremendous amount of discipline and forethought to offer a business for sale when things are going well. But it is also unquestionably (in my opinion) the best time to execute your exit strategy. Please contact me (602-292-0553) for more details on preparing your exit strategy now.
- 3. How long will it take to sell my business ?16.11.15
This can depend on a wide variety of factors. On average, I advise my clients that if their business is properly prepared and priced, it could take anywhere from 3 to 6 months for their business to sell. Obviously there are exceptions. I have seen some businesses sell in a matter of weeks and others have taken more than a year. In general, the sooner I receive all the necessary information to begin preparing the listing for the marketing process the shorter the time period should be to find a qualified buyer. The bottom line is that good businesses with a verifiable track record that are properly prepared, priced, and structured with reasonable terms from the start should eventually sell. Please call or text me now at 602-292-0553 to arrange a confidential consultation if you are ready to move forward and list your business now.
Note: I am confident going forward that my internet presence and marketing programs will continue to reduce the amount of time it takes to find qualified buyers for my listings. Contact me and I will share with you some recent Internet related success stories. Simply put, the more exposure a business listing receives the greater the chance of exposure to the right buyer.
- 4. How long is a typical listing ?16.11.15
I ask all my clients to give me a minimum 6 month exclusive listing. However, if at any time after 3 months from the original listing date you are not satisfied with my service or the level of activity I have generated you are welcome to cancel the listing contract through written notification.
- 5. What type of information do you require for a listing?16.11.15
Listing info required: For an initial confidential consultation to review your business and determine a supportable asking price I would need to see at least a current and two years previous financial statements. If you decide to move forward and the list the business with me I would require all of the applicable information that is noted in my business sale preparation guide. Please go here to view and print a copy of my business sale preparation guide. Please feel to call or text me directly at 602-292-0553 if you like to move forward now in starting the process of preparing your business for sale.
- 6. Do you charge any "up front fees" to market and list a business for sale?16.11.15
Although it is becoming a much more common practice among major business brokerage firms I do not charge any up front marketing fees. The only compensation I receive is a pre-determined commission fee if I find a qualified buyer who purchases your business or an investor/partner who purchases a portion of your business.
- 7. Do you represent Sellers outside the Phoenix- metro area?16.11.15
The short answer is yes. My strong Internet presence and innovative marketing techniques have allowed me to successfully market certain types of businesses outside the Phoenix-metro area including Northern and Southern Arizona. Your best bet is to contact me for more details.
- 8. What is the most important step I can take to help expedite the sale of my business?16.11.15
Along with offering a supportable asking price, in my opinion the most important step you can take to speed the process of selling your business is to have current and at least 2 years previous (3 years is ideal) financial statements (profit & loss with balance sheets) professionally prepared and ready for qualified buyers to review at the time the listing is signed and put on the market. Its been my experience that very few serious buyers will present an offer with out first reviewing this minimal financial history of the business. Its also very common for buyers to request year to date financial statements before presenting an offer.
- 9. Why is Seller financing and offering terms so important in selling a small business?16.11.15
Small business sales stats have shown that Sellers who ask for all cash on average receive only 70% of their asking price. On the other hand Sellers who offer and accept terms receive on average 86% of their asking price. Also, with reasonable terms the chances of finding a qualified buyer for your business will increase dramatically versus asking for cash only. In my opinion, offering some type of terms also re-assures nervous buyers that the Seller has genuine confidence in the viability of the business. Why else would you offer financing if you didn't believe the business could support the debt service?
- 10. What are the odds of receiving all cash from the sale of my business?16.11.15
I would estimate that only 20% or less of the businesses I sell every year get sold for all cash. The majority of these are sales under $125k. Despite the claims that some banks and SBA lenders make about offering 100% financing for small business acquisitions the reality is that this scenario rarely occurs. Its been my experience that most banks and lenders are extremely cautious about small business acquisitions and are more than likely going to require the Seller to agree to carry back (in the form of a note) a portion of the sales price (usually 10% to 20%) before they will approve a loan. Be advised also that most lenders will perform their own business valuation to determine if the cash flow can support the accepted asking price and terms. If it doesn't, they may require the Seller to adjust the asking price and terms before approving financing.
- 11. What are your commission rates?16.11.15
Most business brokerage firms in Arizona typically charge a flat 12% commission on the sales price of a business opportunity. Due to the efficiencies I have created with my Internet marketing program my rates tend to be a little more flexible- on average 10% of the sales price for most small businesses, with a bare minimum commission of $9,750
And because I am an independent contractor I can in most cases also offer my Sellers some other attractive incentives regarding my commission rate & structure not normally offered at most business brokerage firms. For more information please feel free to contact me directly at 602-292-0553 to arrange a confidential consultation. All information is held strictly confidential, and there is never any obligation.
- 12. Do you "co-broke" or work with other brokers to sell your listings?16.11.15
Unless I am specifically instructed otherwise by my Seller, Yes- absolutely. After taking appropriate measures to protect my client's confidentiality, I will work with any professional licensed business broker if they have a qualified buyer for one of my listings. In my opinion, I believe that brokers who do not work with other professional brokers are putting their clients at a serious disadvantage by minimizing the exposure to other potentially qualified buyers in the market place.
- 13. Why are you affiliated with a Real estate company if you are a Business Broker?16.11.15
In this state you are required to have a real estate license to be a Business Broker. Keep in mind that most professional small Business Brokers in the US have a real estate license whether it’s required or not because it is not uncommon to sell a business with some real estate attached.
As far as why I have chosen to keep my real estate license at West USA Realty, as an independent contractor I have found that West USA Realty offers me a lot of advantages versus working for a traditional business brokerage firm. This includes the ability to be more flexible regarding my commission rates and establishing the length of my listing agreements, both of which my clients sincerely appreciate.
- 14. Why shouldn't I try to sell my business on my own?16.11.15
I have talked to dozens of business owners over the last 18 years who have attempted to sell a business on their own. Even with the advent of Internet marketing and "For Sale by Owner" web sites the vast majority of them advised me they would not attempt it again- it was just not worth the hassle, or any perceived cost savings. Even the majority of the owners that were successful admitted that having a professional intermediary involved in the deal would have undoubtedly made the transaction much smoother & less stressful. I can assure you also that it is also a lot harder to protect the confidentiality of a business sale when attempting a "For Sale by Owner" transaction.
- 15. Why shouldn't I try offering my business for sale first to an employee or competitor in my industry?16.11.15
In my opinion, if your goal is to get the absolute best price and terms for your business the best way to accomplish that is to confidentially put your business on the market and let the market do its work. For a number of reasons, it has been my experience that Sellers more often than not ultimately regret the decision to limit the offering of their business for sale just to employees and industry competitors. Its also a fact that most buyers who are already in your industry will generally not be willing to pay you as much vs. a buyer outside the industry. Please feel free to contact me and I will be happy to provide you with some more thoughts on this matter.
- Visit this page to request a free and confidential preliminary Arizona business valuation.