9 Key Steps to Selling Your Business

We think your first step should be to engage Capital Business Brokers. Then, as follows:

1. Evaluation
2. Price & Terms
3. Marketing
4. Buyer Qualification
5. Introducing the Business
6. Confidential Negotiations
7. Structuring the Sale
8. Contracts
9. Closing

The Critical Nature of Each Step

• Evaluation: Properly positioning your business for sale significantly increases the value of your business. The process of selling a business requires professional insights into evaluating your strengths, highlighting opportunities, and exploiting market trends. Your company will be in competition with other companies for sale. Understanding the value you bring to the marketplace and effectively communicating that value to potential buyers is essential.

• Price & Terms: Asking a price that is unrealistic is the number 1 reason businesses don’t sell. At the same time, we find owners often under-value their business, causing them to leave well-earned money on the table. Professional business brokers understand the process of determining a fair market value. Price must be logical and justifiable to potential buyers. Once price is agreed upon, Capital Business Brokers can help guide you to the most advantageous terms to help you achieve your goals.

• Marketing: Identifying and targeting likely buyers requires a high level of expertise. Employing our well-culled data base of potential candidates is a huge asset Capital Business Brokers brings to bear on your behalf. We produce a marketing “Book” or business information package positioning your company for sale. We then professionally and confidentially market your business on local, regional, and national levels. Our objective will be to create a competition amongst buyers.

• Buyer Qualification: We are trained to sort out serious buyers from curious “lookers.” Every effort is made to confirm the buyer’s financial qualifications and motivation before we introduce your business. To maintain confidentiality, we require buyers to sign a non-disclosure agreement. We work towards securing a formal Letter of Intent before moving the buyer to the next step in the process.

• Introducing the Business: The buyer must gain a “feel” for your business by viewing your operation. We understand and respect your need to keep your intentions confidential from your employees. We have developed ways in which we may introduce buyers to your business without prematurely giving away confidential or sensitive information.

•  Negotiations: Many proposed business sales never close because of stalemates in negations. Because of our past experience we enhance the probability of bringing buyers and sellers to a mutually beneficial conclusion.

• Structuring the Sale: Of all the individual elements composing a business sale, structuring the transaction is the most difficult. We are specialists who will assist in determining the most favorable terms to meet the needs of both parties.

• Contracts: Capital Business Brokers team members employ the same success principles on a $100,000 sale as we do on a $10 million sale. We prepare clear, concise documents to protect the interest of both parties. Where needed, we work closely with both the seller’s and the purchaser’s attorneys to resolve any problems before they become obstacles to a successful sale.

• Closing: Following execution of the Purchase Agreement, we oversee the preparation of documentation required to closing the sale, arrange and supervise the closing meeting, and follow-up on all other post-closing procedures. Our liaison between parties saves you valuable time, dollars and energy.

We welcome the opportunity to just talk and explore the possibilities. We realize you may not be ready to sell your business, but we also know being prepared is the first step to an exciting journey and a successful outcome. Call now for a confidential consultation.

About Your Broker, Steven Moore

Steve is a senior-level sales and marketing professional with over 25 years of bringing buyers and sellers together. A life-long resident of Richmond, VA., Steve has amassed a broad and dynamic network of relationships with specialties in construction, publishing and healthcare. He possesses the know-how to get people and businesses moving in pursuit of goals.

Steve acquired the foundation of his business expertise while building a statewide publishing business as Founder and CEO of Target Communications, Inc. Over the past decade, Steve served as Employee-Owner of The Blue Book Building & Construction Network, a $90 million national on-line publishing company. In the role of Area General Manager, Steve honed his sales, marketing, and business management skills. He possesses keen insights in the challenges of running and selling a business.

Who Wants to Buy My Business?

How Much is it Worth?

And more . . .

There comes a time in the lifecycle of every business when a change in ownership is inevitable. The reasons are many and usually highly personal. Sometimes owners are justifiably tired and burned-out. The passion to take the business to the next level just isn’t there. For others, health issues have begun to rear their ugly head. The children don’t want to take over the business or realistically, they don’t possess the wherewithal to assume management/leadership roles.

We understand owner’s concerns and are well-versed in guiding entrepreneurs through a thoughtfully conceived exit strategy. We welcome the opportunity to talk and explore the possibilities. We realize you may not be ready to sell your business, but we also know being prepared is the first step to a successful outcome. For now, here are some key thoughts to consider when contemplating selling your business:

• How Do I Know When the Timing is Right to Sell? One of the biggest mistakes owners make is waiting too late to sell their business. Ideally, one wants to sell when the business is performing at its best. Unfortunately, owners are prone to think, “Why should I sell when things are going so well?” The answer is, buyers will pay a premium for companies in ascension. Once the business begins trending downward, values diminish. Another consideration is the length of time it takes to sell a business. The process is tedious and can take from 6 months to a year, or even longer. Current economic conditions are very favorable for acquisitions. Money is plentiful and interest rates are low. Of course, we all know the economy can change on a dime.

• How Much is My Company Worth? There are a number of different formulas professionals use to determine value. We will be glad to consult with you and provide an approximate valuation. As a cautionary tale, asking a price that is unrealistic is the number 1 reason businesses don’t sell. Similarly, we find owners often under-value their business, causing them to leave well-earned money on the table. Price must be logical and justifiable to potential buyers. Equally important to determining price, a professional broker knows that artfully structuring the deal, negotiating advantageous exit terms, and managing the tax ramifications can be just as beneficial as price towards maximizing outcome.

• Who Wants to Buy My Business? Sometimes the buyer may be part of a private- equity firm halfway across the country. Sometimes the buyer is located just a few counties away, hoping to gain a strategic foothold in your backyard. Many investors and entrepreneurs make their interest known to us and engage us to scout good business opportunities. Having long-standing relationships in place, maintaining a proprietary database of investors, and custom-creating strategic lists of synergistic buyers reflects the muscle that Capital Business Brokers exerts to introduce your business to qualified buyers.

• How Do I Attract Serious Buyers and Vet Out the Curious? Identifying and targeting likely buyers on a confidential basis requires a high level of expertise. Employing our well-culled data base of potential candidates is a huge asset Capital Business Brokers brings to bear on behalf of our clients. Our marketing team produces a “Client Book,” showcasing strengths and skillfully articulating value to interested buyers. We then professionally and discretely market your business on local, regional, and national levels. Buyers must submit to a confidentiality agreement before progressing and a vetting process takes place to identify the premiere suitors.

• What and When Do I Tell My Employees? Many owners don’t want to unnecessarily alarm employees. Confidentiality is a key component between seller and broker. Meetings between buyer and seller can be held in one of our conference rooms and site visits can be arranged before or after working hours. Employees are typically an integral asset of the purchase. Buyers appreciate talent and experience and usually view their continued employment as vital to the succession of the company.

•  How Can I Minimize the Tax Ramifications of a Sudden Windfall? You have worked long and hard to build your business. Now it is time to enjoy the fruits of your labor. Working with your trusted advisors, we will help structure the transaction with the goal to minimize your tax requirement and fortify your potential for future earnings. Our financial team is well-versed in finance, accounting, and strategic planning, and goal oriented to maximize the outcome for our clients.

• Will A Professional Business Broker Cost or Make Me Money? The skill set required to build a successful business is not the same as those employed to successfully sell the business. Selling your life’s work should never be considered a do-it-yourself project.There will be a fee to engage a business broker, typically a percentage of the sale. As with a real estate broker, if the sale is not consummated, no commission is paid. But a broker’s fee will be well-earned. From determining a valuation, to marketing the business, to finding and qualifying the right buyer, to structuring, negotiating, and closing the transaction, the business broker earns a fantastic return on your investment.

By Steven Moore
Steve@CapBizBrokers.com

About the Author: Steven Moore is a senior-level sales and marketing professional located here in Richmond. He is Vice President of Capital Business Brokers, a full-service business brokerage firm specializing in the confidential sales of privately-owned, small and mid-tier businesses located throughout the United States. Capital Business Brokers is a wholly owned subsidiary of Transact Capital Partners, LLC.

Baby Boomers blossomed into a great generation of entrepreneurs. In fact, Inc. magazine reports that 66% of all companies operating in the U.S. today are owned by Baby Boomers. That shouldn’t be a great surprise. Those of us born between 1946 and 1964 are renown for being creative, self-reliant, go-getters inspired by our hard working parents. We turned ideas into businesses and poured ourselves into accomplishment. It was ingrained into our generation to run, not walk, to the finish line. The only problem is nobody told us where the finish line actually is. When is the right time to stop running?

Today, Boomers are staring retirement in the face, and for many entrepreneurs, the burning question is, “What do I do with this business now?”  The passion to grow isn’t quite the same as it was a decade ago. Health issues are beginning to rear their ugly head. And the children have no interest in taking over the family business. Some may still want to work a little longer, just not at the same frenetic pace.

As one might project, this group is aging out of the world of business ownership. According to the Pew Research Center, a nonpartisan American think tank located in Washington, DC., the oldest of the great Boomer generation began turning 65 on January 1, 2011 at a rate of 10,000 per day. This trend will continue for another 19 years! It is estimated that ten trillion dollars’ worth of businesses will change ownership by 2025. The California Association of Business Brokers converts that to the eventual sale of over 12,000,000 privately owned Baby Boomer businesses.

Business Boomers now face a dilemma. How to exit stage left? How do we moonwalk ever so quietly out of the business without everything coming crashing down around us? We can barely escape for an occasional golf outing without a cell phone cry from the office. Most owners report while they wish to retire, they still want the legacy of their business to continue.

Should we take a cue from Willy Wonka and just give away our chocolate factories to millennials who possess the technology and youthful naiveté to take the business to the next level? Of course not! If there is to be a golden ticket, the Boomer who built that business should be the one to claim the prize. After all, it was the owner who poured heart and soul into building the business. Now, with visions of hatching nest eggs, we want to convert our currency from an active enterprise to cash in the bank. We hear the call of Jimmy Buffet, not Warren Buffet.

How do we know if the timing is right?

As with most things in life, timing is everything. One of the biggest mistakes owners make is waiting too late to sell the business. Ideally, one wants to sell when the business is performing at its best. Unfortunately, owners are prone to think, “Why should I sell when things are going so well? Why not ride the wave all the way to the bank?” The answer is buyers will pay a premium for companies in ascension.  Once the business begins trending downward, the rose becomes less fragrant and values plummet.

Another issue related to timing is the length of time it takes to sell a business. It can be a slow tedious process. It helps if one has their financial house in order and current accounting records validate cash flow. Coming to a fair and justifiable price, confidentially marketing the business, finding potential buyers, and structuring the transaction can easily take up to a year.

Additionally, the current financial climate is fertile. As of this writing (July, 2016) there is still money available in the marketplace. Entrepreneurs and private equity firms are looking for good businesses in which to invest. Interest rates remain low, although we know the economy can change on a dime. That is the point. Market conditions are favorable for selling (or buying) a business right now, but who knows what tomorrow may bring? Waiting a year or two could actually evolve into waiting 4 or 5 years for similar market conditions.

Unfortunately, the average business owner does not possess the knowledge in the intricacies of selling a business. The skill set required to build a successful business is not the same as those employed to successfully sell the business. The questions paralyze us: How do I put a realistic price tag on my business? How do I find and attract serious buyers? How do I promote my company without exposing confidential information or scaring the heck out of my employees?

It may be appropriate to hire a business broker. A broker can help guide you through the maze of questions you will have. They can help you create and execute a plan to maximize your valuation. Business brokers usually have a well-culled database of thousands of potential buyers looking to buy businesses from all over the United States. They can help evaluate your company and work with your trusted advisors. They can position your company for sale and articulate your value in the marketplace to an array of potential buyers. Much like a real estate sales person, brokers typically charge a commission and only get paid when the business sale closes. Since their commission is a percentage of the sale price, it is in their best interest to maximize the price they bring you.

There are trusted advisors to help along the way. But the question of where the finish line and when to walk away from the business remains a highly personal decision. Planning is crucial to a graceful and lucrative exit. It’s always best to go out on top.

By Steven Moore
Steve@CapBizBrokers.com

About the Author: Steven Moore is a senior-level sales and marketing professional located here in Richmond. He is Vice President of Capital Business Brokers, a full-service business brokerage firm specializing in the confidential sales of privately-owned, small and mid-tier businesses located throughout the United States. Capital Business Brokers is a wholly owned subsidiary of Transact Capital Partners, LLC.