The decision to sell a small or medium-sized business
represents one of the most important decisions in your
life, as your business embodies the investments and the
rewards for years of hard work. You want the sale of your
business to be concluded at the highest possible price.
Before you make such a decision, you must have thought
or even better have found the answers to the following
It is worth knowing
- The procedure of selling a business is time consuming
and requires a substantial portion of your personal
commitment, if you do not intend to use a business
broker to this end.
- You should not occupy yourself
with the business sale transaction at the expense
of running your business.
- Most of the times when a
business owner sells his business on his own he gets
a lower price than he would if the transaction had
been concluded through a business broker.
owners, who set the asking price at high levels, aiming
at reducing it during the negotiations, alienate a
significant number of serious and qualified buyers.
How will I find
the right business broker?
Business brokers bring together prospective sellers and
buyers of small and medium-sized businesses and help them
become partners instead of adversaries. Clients benefit
from the fact that business brokers know what worries both
parties in the transaction. Moreover, the business owners
– sellers continue to run their business without being
Business brokers know the factors that should be taken
into consideration when determining the value of a business,
are emotionally detached from the transaction, can devote
the means and time to search for the qualified buyers,
coordinate the whole transaction procedure and know how
to promote the business sale.
How will you find a good business broker? Some of the
key questions that you should consider when making your
choice of business broker are:
- Does he have the required professional experience and
- Does he have basic knowledge of accounting and commercial
- Is he a certified member of an internationally
reputable professional association?
- What means is he going to use to promote the business
- What steps does he take to ensure the confidentiality
regarding my business being for sale?
- What are his fees for representing the business for
The fact of the planned business sale should not be revealed
to employees, suppliers, clients and creditors or competitors,
unless the timing is right. For this reason, sellers
should be very cautious when choosing their business
for the sale of the business
The decision to sell should be made well in advance of
the actual transaction and you should not wait till you
are forced to sell.
The professional presentation of your business, that will
meet the buyers’ needs and wants, requires proper preparation.
This preparation may prove lengthy and time consuming,
but it certainly expedites the closing of the deal.
The financial records and statutory books of the business
should accurately picture its financial position. The
financial statements should report all revenues and expenses
of the business and a fair value of the assets. Also, if
possible a tax audit should be performed so as to limit
the possibility of future tax obligations. The prospective
buyer will conduct a legal and financial due diligence
on the business and the seller should make available the
relevant documents for review.
Your accounting, tax and legal advisors should assist
you with the preparation and gathering of these documents.
The business broker will coordinate this team of advisors
and will guide the advisors through all steps of the transaction.
Apart from the above-mentioned data you should be open
to disclose to the interested buyer any information that
helps in understanding the business (e.g. industry data
Preparation in order to understand and face the buyer
The buyer and the seller do not necessarily speak the
same language. Their interests tend to be polarized. The
buyer is the potential entrepreneur who is interested in
the future profitability of the business. The seller wants
to be rewarded for the time, money and energy he has devoted
into his business.
It is essential that you are honest in your discussions
with the prospective buyers. You will gain time and their
trust. You should not let unpleasant surprises for later
Buyers are usually suspicious about the seller or the
information provided. They would ask the same questions
as you would in a similar situation: What are the prospects
of the business? What are the risks? What is the true reason
behind your wish to sell? Are there any hidden liabilities?
The buyers will not accept any price the seller will ask
for. They will evaluate if the asking price is fair. Also,
the buyers do not want to waste their time discussing with
owners who are not really serious about selling their business.
And there are many ways to find this out: from the reputation
of the business broker involved in the transaction to the
way the business is being promoted.
In the meantime, you should be able to evaluate the prospective
buyer yourself and ensure that he is serious, motivated,
capable of paying the price and that he has the management
skills necessary to run the business.
The more time spent on discussions the less likely it
is that the transaction will be concluded.