Anyone that has bought and sold businesses will tell you that each transaction is quite different. However, there is a defined process that should be followed to increase the probability of success when selling a business.There is a proven 12-Step process that most professionals follow. Although businesses can be sold by skipping a few steps, the frustration level and wasted effort increases considerably by attempting to take shortcuts. There is a business of selling businesses provided by many professional business brokers. Sometimes they may be referred to as Business Intermediaries.
Not only do the steps need to be followed, they must be done in a certain order. Listed below are the proven 12 steps for selling businesses used by successful business brokers.
12 Step Proven Process to Market and Sell Businesses
1. Gather Business Information
2. Conduct Business Valuation
3. Execute Listing Agreement
4. Prepare Marketing Documents
5. Develop and Implement Marketing Plan
6. Qualify Potential Buyers
7. Secure Offer to Purchase
8. Orchestrate Buyer/Seller negotiations
9. Coordinate Buyer Due Diligence
10. Assist with Financing the Business
11. Arrange Preparation of Closing Documents
12. Transfer of Ownership of the Business
From start to finish this process can vary considerably, however, a rule of thumb is 9 months to sell a business. The best thing a business owner can do is find a professional business broker to handle all of these steps while they focus on increasing profitability. To command a premium in the market, the business must be well run and exceeding key metrics such as gross margin, sales per employee, customer mix and others as compared to industry averages. Professional business brokers are aware of these key metrics and can help you tidy up certain areas while they are busy attracting qualified buyers. Lending institutions love assets, buyers are more focused on cash flow.
Interview several business brokers so that you are comfortable with their professionalism, process and most importantly, confident they can deliver the result. Selling a business has a lot of administrative details that will distract the owner when they need to be laser focused on increasing profitability and squeezing out extra cash flow.