Price Realistically. Do not overprice
or underprice your business. If you price too high you
will scare away qualified buyers. When overpriced, many
buyers will not make you an offer for fear of offending
you. The longer your business is on the market, the greater
the chance of your employees, suppliers and customers
finding out. Look for comparable sales and price accordingly.
Prepare a business offering package,
include all the information that buyers need to see such
as leases, P&Ls, tax returns, etc. Buyers will lose
enthusiasm waiting for these items to be produced.
Bring deferred maintenance up to date
before putting your business on the market. When buyers
see items that need fixing, they often wonder about the
condition of things they can’t see.
Prepare a purchase agreement before
finding a buyer. Then you can fill in the blanks when
you have a deal. Attorneys are often very slow in preparing
agreements and the buyer’s enthusiasm may evaporate
as a result of delays.
Look for buyers in as broad an area
as possible. Don’t depend on your local newspaper
to produce leads. Only a fraction of potential buyers
are reading that paper at any particular time. The way
to get optimal price is to have as many qualified buyers
as possible.
Qualify the buyers immediately. You
need to know about their financial strength and business
skills before you provide them with highly sensitive information
about your business or spend your precious time with them.
Make sure that your location and equipment
leases are transferable before you look for a buyer. Many
deals have fallen apart because the lessors refuse to
assign a lease. If your remaining lease is short, negotiate
a new lease before offering the business for sale.
Agree on a sale price and terms with
the purchaser before providing access to your financial
records. It is extremely important that a buyer have ample
opportunity to examine all aspects of your business and
that all disclosures are made. These steps help both sellers
and buyers to avoid lawsuits.
Make sure you state every agreement
of the transaction in writing, including contingency removals.
People quickly forget things that aren’t written
down, resulting in arguments and lawsuits.
Require a substantial deposit. When
you have reached an agreement with a buyer, the deposit
should be held by a neutral escrow holder to limit your
liability.
