Guide to Sell your Business in 2020 (9 steps) - Business Brokers | 1-800-Biz-Broker

Step 1: Get a Business Valuation

Want to sell your business in 2020?  The first thing you need to do is get a business valuation.  You’re in luck! We can do this for you. Contact us here for a free and confidential business valuation.

We will send you a non-disclosure agreement so that you will feel more comfortable sharing the info we will need to review to prepare your business valuation.

What information do we need to prepare a business valuation?  At the very least we will need to review 3 years of Income Statements and Balance Sheets.  Sometime we also like to review the last 3 business tax returns. There are several factors we consider when valuing a company. Our experienced business broker will give you a range as to what your business is worth if sold today.

Step 2: Draft a Listing Agreement

If you (business owner) decided to move forward and engage us in an agreement to find a buyer, we will prepare a draft listing agreement for your approval.  By the way, we hate long term agreements. Most of our agreements are for 6 months or less, then renew for 30 day periods. Just so you know, on average, it takes 9 months to find a buyer and sell a business.  So why only a 3-6 month agreement? Well, we want you to feel comfortable with your agreement and we need to be accountable. If you feel we are not doing our job, you can fire us!

By the way, we do not charge any up-front fees.  We only get a fee IF and WHEN we sell your business.  No sale, then no fees.  

Step 3: Prepare a Confidential Prospectus

We will meet and become more familiar with you and your business.  We will also get more comprehensive information from you. Income Statements, tax returns, asset lists, leases, employee roles,  etc… Then we will write a “prospectus” that we will share only with qualified buyers who have completed a non-disclosure agreement.  Let’s be very clear. The sale of your business should be a highly confidential process. When we shop your business to potential buyers, we use “blind” ads.  Only qualified business buyers will see your company’s confidential prospectus.

Step 4: Pre-Qualify your business for Bank Financing

We like to organize financing for your business BEFORE we look for a buyer.  This step opens the market of potential buyers substantially. More potential buyers = more offers = better price!  If your business is priced at $1,000,000 it will be more sellable if a Bank is willing to finance the purchase. A buyer need only come up with 20-30% of the price of your business

Step 5: Market the Business for Sale, Confidentially!

The marketing strategy of selling the business will vary by business type, but generally we will find a buyer from our registered buyers pool, a marketing and ad strategy across the most important business for sale websites, trade magazines, regional papers, and/or we look for strategic buyers and reach out directly via phone, letters, and social media.

Step 6: Field Offers!

We solicit offers from all interested Buyers.  We negotiate the best price & terms. You, the seller, decided which Buyer and transaction suits your needs the best.

Step 7: Due Diligence

Due Diligence is a period of time where the Buyer gets to review and verify the businesses books, bank statements, tax returns, leases, etc..

Step 8: Escrow

Escrow is a third party, neutral service that holds the buyer’s funds until the seller delivers the business assets.  Once both sides complete their obligations, escrow releases the monies to the Seller and assets to the Buyer.

Step 9: Training / Transition

Once the deal closes, the Seller usually trains the Buyer, and introduces the clients and vendors.  This time period is usually 1-3 months (or more). The amount of training/transition is negotiated well in advance.

Are you thinking about selling your business? Give us a call. We can help you with a confidential and free business valuation. We are experienced Business Brokers. WE SELL BUSINESSES.

Selling a Business FAQs

How much is my business worth? At the end of the day a business is worth what a buyer is willing to pay and the seller is willing to accept. However, there are several items to consider. Would a bank finance the purchase? In a real estate transaction, a banker isn’t going to loan more than the appraised value of a business. Likewise, a business is worth a function of its earnings earnings times an industry specific multiple. Put yourself in the shoes of a business buyer, they are only going to pay a few times the annual adjusted earnings of the business to get a fair return on their investment.

How do you price a business for sale? This question goes hand in hand with the previous answer. For a majority of businesses with gross sale less than $5M, a business valuation is based on an industry specific multiple multiplied by the business’ adjusted earnings.

How do find business buyers? We start by creating a marketing plan that will target the most likely potential buyers of your specific business. This may be trade magazines, our current database of registered buyers, sites like BizBuySell, BizQuest, BizBen, and others (all of which we are premium broker members)

Download You Business Valuation Worksheet Here