Selling Your Business on Your Own!

As a business broker, I come regularly across business owners who investigate selling their business on their own. Business brokers charge a  commission on the sale price of the business that can seem substantial to business owners who have not bee involved in the sale of a company before. The following are some of the questions business owner frequently ask me and some of the answers  answers I have been giving  them:

What is involved in the sale of my business? – what is the process?

  • Understand what makes my business unique, how profitable it is and what prospects are for the future.
  • Analyze my  financial statements and identify trends.
  • Adjust the profit figures to reflect the real profits of my business
  • Determine a range for the asking price for my business.
  • Write an attractive ad and post it in more than 10 business for sale websites  (it would cost a business owner about $500/months to pay for the ads)
  • Call people who inquired about the business, interview them and make appointments with them without divulging specific information about the business –  keeping confidentiality is the key to a successful sale
  • Meet with interested people and verify that they are ready, willing and able to buy a business.
  • Have the qualified buyers read, understand and sign a comprehensive confidentiality agreement and provide a copy of their ID’s
  • Provide buyers with selected business information and explain it to them.
  • Help buyers think thoroughly on what they really want to do and whether the offered business really fulfills their needs.
  • Understand buyers circumstances and solved  any miss communication problems that might occur.
  • Follow up with buyers and explain them how the offer process works.
  • Explain all the intricacies of the offer and make a decision about offers.
  • Understand the due diligence process and go through it with the minimum risk.
  • Help the buyer decide about the outcome of the due diligence.
  • Have the buyer sign the forms to firm up the deal.
  • Cooperate with the lawyers for an legal maters.

As a business owner, can I reasonable sell my business myself?

Yes everything is possible if we pay the price but is it really worth it? Following the steps described above is extremely time consuming, especially for somebody who is doing it for the first time. This is what might or will happen:

  • As when we want to learn new things, we make mistakes in the beginning. Can you afford to make mistakes on the sale of your business? Possible mistakes include, giving your sensitive information to the wrong hands, focusing too much on the sale and letting your business deteriorate to the point where it’s not sellable anymore, spending a lot of time and money on lawyers and accountants with buyers who are not real buyers.. and the list of possible costly mistake goes on and on.
  • Becoming frustrated and abandoning the sale of the for lack of help. The sale of a business is very emotionally draining. With no help, very few people can handle the ups and downs. Most people give up on the whole idea after a short trial period.
  • being taken advantage of by dishonest fake buyers. The best way to learn about a particular business is to pretend that you are a potential buyer and get as much information as possible about it. Business owners find themselves spending tremendous time and money to teach their future competitors how to do business. This is so unfair!

What if I have already a buyer I am working with, should I drop him/her and look for a broker to sell my business? if your buyer seems serious and has already spent money and efforts on the purchase of your business, you should work with him. You might hire a broker who will continue to market the business so that your buyer feels pressure from other competitive buyers and take less time to make his/her decision to buy and/or offer a higher price. You could also focus on that buyer and only hire a broker if it doesn’t work out. Most importantly, you should be firm with buyers and refuse to be at their mercy and give away what ever they require. Unreasonable requests are requests that could harm your business should the buyer not complete the transaction. Such requests include divulging trade secrets, customer lists etc..

There are however some circumstance where you might do a good job selling your business yourself. These are a few examples:

If your business is so unique that only a few potential buyers can acquire it. For example, the business requires some specific skills that only a few specialized companies/individuals have and you know who they are. In this specific case you might be better-off contacting this short list of potential buyers and negotiating with them directly. Of course professional help is always a plus.

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  1. From Selling a business Info - Business Brokers - Are They Worth Their Fees? on 03 May 2009 at 8:22 pm

    […] our previous post we explained the work involved in selling a business and if it makes sens for the seller to do it […]

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