What are some mistakes sellers commonly make as they near the close of escrow?
Let's be honest, typically it takes a while (6 months to a year) to sell a business, from listing to close of escrow, and so it's common that many sellers are anxious as the close of escrow nears with a buyer. Many of my clients who own restaurants and are selling them, have been working tirelessly at their business and are waiting the day that they can hand the keys over to a new buyer.
A deal is not over until it's over, and the escrow has officially closed, and so here is my advice to alleviate any last many hiccups.
1. A seller should never allow a buyer to do their training before the close of escrow. Most contracts stipulate that seller will train buyer for 80 hours or two weeks after the close of escrow. Many buyers are anxious to learn the business, and many sellers would love to hand the keys over and begin a new venture, but until the close of escrow, this is a mistake. A buyer may feel overwhelmed, or the business may have a slow week, and they begin to suspect that the seller lied about the financials or the buyer and seller may have a clash of personalities and throw the deal into jeopardy.
2. A seller sometimes will see a closing date and stop ordering inventory. I have sold sandwich shops, for example, and have seen sellers begin rationing their ordering of meats, bread, cheeses, etc., and when I notify them that the close of escrow will be 10 days later than expected, they are alarmed because they have been cutting back on their ordering. The seller will be paid by the buyer for inventory, so they should not stop their usual ordering practices, and damage the goodwill of the business. Keeping normal business hours, not closing early, cutting down on staff, etc., is also important, because a seller should not give a buyer any valid excuse that they may want to back out of the deal.
3. Keep communication between buyer and seller through the business broker. As the deal ends, the buyer and seller may communicate more frequently, and the broker who they relied on earlier in the transaction, may seem to become less relevant, as the deal seems to be on autopilot. Any disagreements and final negotiations should always have the broker involved, because they will be able to mend conflicting personalities and find common ground if disputes should arise.
4. Unless stipulated otherwise, what the buyer saw in the business when they wrote the offer, stays in the business. I have seen deals thrown into jeopardy because a seller decided that they were taking off the wall a 60-inch TV or replaced it will a cheaper brand and the buyer flipped out. Some sellers may write in the counteroffer of business disclosure that a certain painting, etc., is going with them, because it's a family memento or something, but other than that, they should keep everything in place for the buyer, because even the most trivial things can upset a buyer and destroy deals.
|Helpful Resources To Assist In Selling And Buying California Businesses|
|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.
|William F. Ziprick, Attorney: Legal Services For Buyers And Sellers
Through creative problem solving, attention to detail, accessibility, & understanding that unnecessary delay is often a deal killer, I work closely with my clients and other professionals to consistently achieve a high rate of closings. Office: 909-255-8353, Cell: 509-951-7230.
|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.
|Shalonda Chappel: 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.
|Larry Larsen: Laundry Consulting, Brokerage, Insurance
I have over forty years of experience in the sales, ownership, management, and construction of coin laundries. He is a licensed broker active in the sale of coin laundries, a licensed insurance agent specializing in coin laundry insurance. Phone me at 714-630-9274 or 714-630-Wash.
|William Park, Business Broker: Southern California
Highest Volume Broker in California, Simply Check our HUNDREDS of Listings! Over 25 Associates, Speaking Dozen Languages, Helping Buyers and Sellers of Small Business since 1982, Centrally Located between Los Angeles and Orange Counties, while Riverside & San Bernardino Counties are Very Accessible.
|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.
|Michael Davidson, Business Broker - Southern California
Los Angeles Business Broker providing M&A quality services for Small Business Owners. We leverage our technology and expertise to Simplify & Expedite the Business Sales Process. Matching the right buyer with the right business is how we define success.
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