The buy my business strategy of most owners of small and mid-sized companies usually can be implemented successfully if the seller has prepared necessary information and is ready to do what will be needed in order to accomplish that objective. Here are some tips on what steps are required to find a buyer and complete a transaction.
1. Determine price and terms. Business brokers and business evaluation experts will be helpful in providing information and guidelines for determining the company’s probable market value. Those sources also can provide insight into how the deal should be structured--what percentage of the price the seller should be willing to carry back, and at what terms.
2. Assembling materials for review by buyer prospects is the next step in getting the business ready for market. The paperwork should include profit and loss statements balance sheets and supporting reports and documents. Copies of leases (equipment and premises) and franchise agreements, if any, also are important. Additionally, the buy my business packet needs to include an overview of the company, how long in business, how many employees, what are gross annual volume, and earnings, and so forth. Don’t forget to supply a list of assets to be included in the sale--and explain what portion of the purchase price is assigned to each.
3. Obtain approvals needed for the transfer. That might involved the landlord, or perhaps the franchisor, if applicable. Even if transferability is part of the agreement with relevant third parties, it’s important to contact them because they need to know what you are planning to do.
4. Prequalification for an SBA loan program is a good tactic. It will be the buyer who ultimately will need to go to a lender or lenders seeking the money needed for help with a down payment and/or working capital. But the act of getting the company pre-qualified, makes it a more desirable company to buy. The buyer learns the SBA, for example, is familiar with the company. And a positive indication from a prospective lender underscores, for those interested, the value and viability of the business.
5. Line up advisers beforehand. That will include an attorney, to make sure the legal language protects the seller; an accounting professional to help explain the company and its financial circumstances during any due diligence; and perhaps a business valuation expert to let you know how to price the company.
6. Marketing the business--a process that can take one of two directions. The first is to interview business brokers and to select the one who seems best suited for the assignment. In this case, it’s the seller’s job to make every effort to work with the broker effectively by providing information and materials requested, being available for showings of the business and meetings with buyer candidates, and carefully considering the broker’s advice and suggestions.
The second approach is to handle the buy my business campaign as a do it yourself project. That entails preparing basic information about the company for prospective buyers, then advertising that it is for sale using carefully selected media with a successful track record of matching buyers and sellers, such as BizBen.com.
7. Continue to focus on operating the company. Some owners, once they’ve made the decisions to sell and then begin the process, start to neglect the business because they’re losing interest in it and thinking about doing something else. That’s a mistake. When on the market, it is critical for a business to be running smoothly and profitably.
The buy my business campaign undertaken by owners of small and mid-sized California businesses will be most successful if the sellers follow these suggestions for preparing and executing their plan.
About the Author: Peter Siegel, MBA is the Founder of www.BizBen.com (established 1994 - 7000+ California businesses for sale, 200 new listings daily) and the Director of the BizBen Network (16,000 business buyers, 4,000 small business owners, 1,800 California business brokers & agents). Business owners and brokers looking for assistance in selling a business online can reach Peter Siegel direct at 866-270-6278.
|Helpful Resources To Assist In Selling And Buying California Businesses|
|Helen Yoo: Escrow & Bulk Sale Services - 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.
|Willard Michlin, CPA, Certified Fraud Examiner, Due Diligence Services
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.
|Diane Boudreau-Tschetter: Escrow And Bulk Sale Services
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.
|Ranvir S. Sandhu, Esq. - Legal Services For Buyers And Sellers
I've worked at top Bay Area law firms and have extensive experience with business entity formation, mergers, dissolutions, conversions, employment matters, including experience in reviewing and negotiating transactional documents such as leases and purchase agreements.
|Janet Carrera - Escrow & Bulk Sale Services - 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.
|Elizabeth McGovern: Escrow Services - SF 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.
|Brad Steinberg, Broker - Laundromat Specialists
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.
|Joe Sandbank, Esq. - Legal Services
I have provided legal counsel to business buyers, sellers and brokers for over 17 years. With prior experience as a business broker and SBA loan officer, Joe brings both a practical and legal approach to all aspects of the business acquisition process.
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