Share This Info:  

Selling A California Business - 13 Crucial Steps


Selling A California Business

Overall only 30% of all small businesses for sale throughout California that are put on the market (either formally through advertising or informally by "getting the word out") are actually sold!  A surprising statistic to most small business owners, agents, and certified business brokers trying to sell a small to mid-sized California business!

Consulting (ProSell Program) with owner/sellers, brokers, agents, and intermediaries throughout California on a daily basis I see owners/brokers/agents not following the advice below and usually they are the ones ending up not selling their business and being part of that 30% statistic listed above.

If however you follow the steps and tips below (and follow the "ProSell Program" of selling a California business) your chances of selling dramatically increases!

Have All Records Ready Before You Go To Market!

Have these items ready before the business goes on the market to be sold: The last 3 years of federal tax returns for the business being sold, the last 3 years of financials (profit & loss statement, balance sheet), the last 3 years of monthly bank statements, copy of current lease, list of all equipment being sold with the business, etc - many parties during the selling process will need this info - serious business buyers, your landlord for a new lease for the new buyer, lenders (for a possible loan/financing for the buyer, note buyback firm (in case you want to sell the note for cash after the business sells). Also make sure you know what the correct adjusted net income has been for the last 3 years. Serious business buyers will want to know this.

Have A Professional Business Valuation Performed

Getting a 3rd party professional business appraisal/valuation is important and critical for the process. 70% of all businesses NEVER SELL usually due to too high of price (and/or a bad deal structure) placed on the business being sold. Getting a professional 3rd party valuation is well worth the expense and will be utilized by many parties during the selling process: possible business buyers, lender/financing companies for the buyer, and others.

Keep A Folder Of All Info/Contacts

Keep a folder of all contacts, notes, and paperwork for your small business for sale transaction. Keep a log of all buyers who contact you - get their phone numbers, email address and keep notes about them (this will come in handy down the line, trust me). You want to make sure you have backup buyers in case your first choice drops out during the selling process. Keep all escrow info, purchase agreements, signed non-disclosure/confidentiality forms, contact phones of CPA's, Attorneys, etc. and other pertinent data/info in this folder!

Write Up A Comprehensive Summary Of The Business

Buyers are going to need to know many details about the business being sold. Instead of having to re-explain to many buyers about the business (and probably forgetting many important facts) make a one page summary of the business being sold. Include: History of the business, date established, number of employees, important attributes about the business and surrounding area, what you would recommend to a new buyer to increase business once they take over, what geographic area the business covers, the competition, the reason for selling, how much training will be provided after the sale, etc.

Confidentiality Agreements Are Important

Have all potential business buyers sign and date a Non-Disclosure/Confidentiality Agreement before giving out any info. Make sure potential buyers understand how important it is to keep the sale of the business confidential and that there are legal ramifications if they don't.

Get Controlled Maximum Exposure On The Sale Of The Business

One of the most important items is to make sure that many, many buyers (ones that are qualified to buy) see the business is for sale. Expect to spend $400-$1000 for advertising and marketing  (BizBen Fast Track/ProSell Program) to sell your business to adequately get the word out to the right business buyers. Yes it does only take one buyer to buy a business, but you want to make sure you have multiple business buyers (and backups if possible) ready to go!

Get The Business You Are Selling Pre-Qualified For Financing

You are probably saying "that is the buyers responsibility to do this!" You couldn't be more wrong. This is a critical step in insuring that possible buyers can get SBA loan financing in the first place to buy the business. This is highly important, since if a buyer can't get financing from a lending institution that means the owner will have to take back a note, or sell the note after it sells for a discount etc. By doing this step early you will know what some very important options will be for potential business buyers without a lot of time being wasted - and TIME KILLS DEALS!

Keep The Negotiating & Communications Moving Forward!

Remember - TIME KILLS DEALS. Make sure when you are negotiating the contract, allocation of purchase price, new or restructured lease, etc. always be moving forward. Don't let any situation sit too long - it will most likely kill the deal!

Get The Signed Purchase Agreement Into Escrow

Get the signed purchase agreement into escrow immediately and sign off any contingencies quickly - remember TIME KILLS DEALS. Make sure you go through the Allocation of Purchase Price in the beginning of the escrow process not at the end which happens most of the time.

Due Diligence By The Buyer Should Not Last Forever!

Due diligence by the buyer should only last 4-14 days. Since you are going to be organized and ready with all important info and documents, this is all the time any competent business buyer (and CPA for the buyer) should need to investigate the business for sale. You do not want the business off the market for a prolonged period so be firm about the length of time for due diligence - get it in writing (purchase agreement) and make sure all parties to the transaction stay with the schedule!

The Business Is Not Sold Until You Have Check In Hand!

Always continue to collect names of business buyers and their phone numbers etc. even if you are in escrow (50% of all deals fall out for one reason or another!) You want to make sure you have a successful deal and a business buyer that is going to complete the deal. Try to have 2-3 potential business buyer back-ups who are willing to take the buyers place within the escrow should the current business buyer drop out.

Keep A Positive Attitude - It Will Happen!

Keep calm and a have a positive attitude. By following these steps (and utilizing the bizben Method of selling a business) you will definitely find a qualified buyer for your business! Things happen pretty quickly when selling a business. If you are prepared, follow through with all buyers professionally and keep up on the selling process, you will be successful!

Categories: BizBen Blog Contributor, Deal And Escrow Issues, How To Sell A Business

Contributor:

Peter Siegel, MBA
Areas Served: All Of California
Phone:  925-785-3118 Cell, 925-785-3118 Text
Founder & President Of BizBen.com (since 1994) & BizBenNetwork.com. I am the Lead Facilitator for the ProSell & ProBuy Programs on both websites. I consult daily with buyers, sellers, and intermediaries daily about buying and selling businesses. Call 925-785-3118.

Comments Regarding This Blog Post


And, here's the critical 14th critical step -- keep running and growing the business up to the very day of the closing. Don't presume the business is sold until the "check has cleared." Many a business has lost significant value because the seller "retire in place" when the contract was signed ... and then the deal fell through.






  Helpful Resources To Assist In Selling And Buying California Businesses
Elizabeth McGovern: Escrow Services - San Francisco Bay Area

McGovern Escrow Services, Inc., is a leading independent escrow company. We are a trusted partner with our clients, assisting them through the tangled bulk sale & liquor license transfer process. We provide attentive, quality & innovative customer service. Phone Elizabeth McGovern at 415-735-3645.

Diane Boudreau-Tschetter: Escrow & Bulk Sale Services - CA

California Business Escrow, Inc. is a full service independent escrow company serving all of California and has expertise in a wide range of escrows. Our team prides itself on providing an exceptional escrow experience. For more info phone Diane Boudreau-Tschetter at 888-383-3331 or 209-838-1100.

Brad Steinberg, Business Broker: Laundromat Specialist

PWS is the leading laundromat broker in California. Since 1968 PWS has brokered over 2,500 laundromat sales. With over 90 employees dedicated to the coin laundry industry, PWS has 18 licensed agents, a 3 person in-house finance department, 10 service technicians and a 20 person parts department.

Janet Carrera: Escrow & Bulk Sale Service - SF Bay Area

Redwood Escrow Services, Inc. is a full service, licensed independent escrow company. We are EAFC Fidelity bonded, fully insured & licensed with the Department of Corporations. Committed to offering our clients the most comprehensive variety of escrow services available. Phone Janet at 510-247-0741.

Willard Michlin, CPA, Certified Fraud Examiner, Due Diligence

Willard Michlin, CPA #106752, offers buyers step by step training & assistance in doing Due Diligence Services when they are thinking of making an offer, or are in process of investigating a business purchase. He helps to determine the actual net profit even when there is cash. Call 805-428-2063.

Shalonda Chappel-Pilgram: Escrow & Bulk Sale Services - Southern California

Escrow services to brokers/agents, sellers, & buyers. Established 43 years. Extraordinary service. Experienced with handling difficult transactions. One stop for all your escrow needs: Bulk sales, lien searches, UCC searches, liquor license transfers, publishing & recording services. 951-808-3972.

Helen Yoo, New Century Escrow - Escrow Services In Southern California

New Century Escrow, Inc. is a fully licensed & bonded independent escrow company. Over 20 years combined experience in handling bulk escrow transactions. Multi-lingual staff that speaks your language, including Korean, Chinese, Vietnamese. Call Helen Yoo direct at 626-890-1151.


  Related Articles, Events, Blog Posts, Discussions, Videos, Interviews
Buy A Business Or Start From Scratch? 5 Key Differences For Business Buyers

Some buyers believe it's better to start a business from scratch rather than buy an existing enterprise. While this may be good advice in some cases, usually it's not the best strategy. Here are five tips to help a buyer make the right decision from from Peter Siegel, MBA (BizBen Director).

Before Buying A California Business, 10 Questions You Should Ask Yourself

Before buying a business, all serious business buyers should ask themselves some key questions about possible buying a small California business, franchise, or opportunity - from Peter Siegel, MBA (Business Purchase Financing Expert, ProBuy & ProSell Program Advisor with BizBen) at 925-785-3118.

Tips When Using Escrow Bulk Sale Services When Buying Or Selling A Business

The final part of the business for sale transaction is the escrow and bulk sale process by Peter Siegel, MBA (Business Purchase Financing Expert, ProBuy & ProSell Program Advisor) answers questions and describes the escrow and bulk sale process. Peter can be reached direct at 925-785-3118.

Selling My Small Business: What Items Should I Have Ready To Be Successful?

When selling a small to mid-sized business, owners should have their paperwork and financial information ready to go! They should also have a short business plan of past history, current operations, and potential for the future. In this BizBen Discussion several advisors and intermediaries weigh in.

I am Buying A Business: Should I Buy The Property As Well? A Good Decision?

There are advantages and disadvantages to owning commercial property. Here are a few questions to ask when it comes to deciding whether or not to buy the property along with the business. Peter Siegel, MBA with the BizBen ProSell Program reviews this issue with potential sellers and intermediaries.

Financing A Business Purchase With Limited Or No Real Estate Collateral

In my experience working with the "right banks and financial institutions" repayment ability sometimes overrules collateral pledged by someone needing financing for a business purchase or a down payment. Peter Siegel, MBA (Business Purchase Financing Expert) at 925-785-3118 shares his experience.

Sellers Ask: How Long Should I Wait For The Buyer To Do Their Due Diligence?

Business sellers & buyers ask the question in the buying process-how long should I ask for due-diligence when buying a small business? The answer really depends on several factors. They include: type of business, demand for the business, complexity of the business. Advisors weigh in on this topic.

Why Isn't My Business Selling? 6 Great Questions To Ask Yourself For Answers

It can take months, sometimes longer to sell a small business. Here are 6 questions from Peter Siegel, MBA (Business Purchase Financing Expert, ProSell Program Advisor with BizBen) at 925-785-3118 to ask yourself to help you determine why your small to mid-sized California business isn't selling.


Escrow Services Diane Boudreau-Tschetter
Golden State Laundry System Laundry Business Brokers
Chuck Post Laundromat Industry Expert
San Diego Restaurant Owner Selling
Facebook
Twitter
Linkedin
Vlogs and Podcasts
BizBen ProBuy Program
California Educational Events Buying And Selling Businesses
Instant Email Alerts On BizBen
Business For Sale California Stats
Advertise On BizBen
New Postings Reports On BizBen Sign Up

BizBen - Where California Deals Get Done! 888-212-4747
7172 Regional Street #364 · Dublin, CA. 94568
BizBen · Copyright © 1994 - 2019, All Rights Reserved



Clost Login


Please confirm your registration by clicking the link we've sent to .

If you can't see it, please check your junk mail folder.

If you have any problems registering, or need assistance with your new BizBen User Account please phone BizBen Customer Support at 888-212-4747.



First Name:*
Last Name:*
Email Address:*
Confirm Email:*
Create Password:*
Confirm Password:*
Phone:
(   
 


You Are A:
Individual
 
Intermediary
 

Email Address:
Password:
 

500 New & Refreshed Detailed Postings Daily
Over 2500 Resources Available On BizBen
Since 1994. Where California Deals Get Done!
What Factors Are Considered In Valuing A Small Business? Advisors Weigh ...
Read More News
Sellers Ask: How Long Should I Wait For The Buyer To Do Their Due Dilige...
Read More News