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How long does it take to sell my
business?
It generally takes, on average, between five to eight
months to sell most businesses. Keep in mind that an average is just that.
Some businesses will take longer to sell, while others will sell in a
shorter period of time. The sooner you have all the information needed
to begin the marketing process, the shorter the time period should be.
It is also important that the business be priced properly right from the
start. Some sellers, operating under the premise that they can always
come down in price, overprice their business. This theory often "backfires,"
because buyers often will refuse to look at an overpriced business. It
has been shown that the amount of the down payment may be the key ingredient
to a quick sale. The lower the down payment, generally 40 percent of the
asking price or less, the shorter the time to a successful sale. A reasonable
down payment also tells a potential buyer that the seller has confidence
in the business's ability to make the payments.
Why Is Seller Financing So Important
To The Sale Of My Business?
Surveys have shown that a seller, who asks for all cash,
receives on average only 70 percent of their asking price, while sellers
who accept terms receive on average 86 percent of their asking price.
That's a difference of 16 percent! In many cases, businesses that are
listed for all cash just don't sell. With reasonable terms, however, the
chances of selling increase dramatically and the time period from listing
to sale greatly decreases. Most sellers are unaware of how much interest
they can receive by financing the sale of their business. In some cases
it can greatly increase the amount received. And, again, it tells the
buyer that the seller has enough confidence that the business can, indeed,
pay for itself.
What Happens When There is a Buyer
for My Business?
When a buyer is sufficiently interested in your business,
he or she will, or should, submit an offer in writing. This offer or proposal
may have one or more contingencies. Usually, they concern a detailed review
of your financial records and may also include a review of your lease
arrangements, franchise agreement (if there is one) or other pertinent
details of the business. You may accept the terms of the offer or you
may make a counter-proposal. You should understand, however, that if you
do not accept the buyer's proposal, the buyer can withdraw it at any time.
At first review, you may not be pleased with a particular
offer; however, it is important to look at it carefully. It may be lacking
in some areas, but it might also have some pluses to seriously consider.
There is an old adage that says, "The first offer is generally the
best one the seller will receive." This does not mean that you should
accept the first, or any offer -- just that all offers should be looked
at carefully.
When you and the buyer are in agreement, both of you should
work to satisfy and remove the contingencies in the offer. It is important
that you cooperate fully in this process. You don't want the buyer to
think that you are hiding anything. The buyer may, at this point, bring
in outside advisors to help them review the information. When all the
conditions have been met, final papers will be drawn and signed. Once
the closing has been completed, money will be distributed and the new
owner will take possession of the business.
What Can I Do To Help Sell My Business?
A buyer will want up-to-date financial information. If
you use accountants, you can work with them on making current information
available. If you are using an attorney, make sure they are familiar with
the business closing process and the laws of your particular state. You
might also ask if their schedule will allow them to participate in the
closing on very short notice. If you and the buyer want to close the sale
quickly, usually within a few weeks, unless there is an alcohol or other
license involved that might delay things, you don't want to wait until
the attorney can make the time to prepare the documents or attend the
closing. Time is of the essence in any business sale transaction. The
failure to close on schedule permits the buyer to reconsider or make changes
in the original proposal.
What Can Business Brokers Do -
And, What Can't They Do?
Business brokers are the professionals who will facilitate
the successful sale of your business. It is important that you understand
just what a professional business broker can do -- as well as what they
can't. They can help you decide how to price your business and how to
structure the sale so it makes sense for everyone -- you and the buyer.
They can find the right buyer for your business, work with you and the
buyer in negotiating, and every step of the way until the transaction
is successfully closed. They can also help the buyer in all the details
of the business buying process.
A business broker is not, however, a magician who can
sell an overpriced business. Most businesses are saleable if priced and
structured properly. You should understand that only the marketplace can
determine what a business will sell for. The amount of the down payment
you are willing to accept, along with the terms of the seller financing,
can greatly influence not only the ultimate selling price, but also the
success of the sale itself.
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