When you have made the decision to sell your business, one of the considerations you will need to address is whether to use the services of a business broker for the transaction. Do you really need a business broker, or can you just sell your business on your own?

The short answer is yes, you absolutely need a business broker.

What follows is the fifth in a series of articles listing the reasons why the services of a business broker are essential for a smooth and successful business transaction. Mistakes made during a business transaction, many made simply because of the inexperience of the business seller, can be extremely costly. The fees you pay to utilize an experienced broker can be more than justified by avoiding these major blunders.

#5: Protection from Legal Issues

It is a sad reality of our litigious society that lawsuits are filed each and every day. For those in the process of selling a business on their own, the threat of lawsuits is a real and costly one.

Recent research has found that almost one-quarter of all business transactions that close end up in some sort of litigation. These litigations stem from issues like improper contracts, buyers who may feel they have been deceived in some way by the seller, buyers whose expectations have not been met, etc.

What is the best way to avoid the cost and frustration of these and other types of litigation issues that arise after the closing of a business transaction? Hire a good business broker.

The process we use cannot possibly avoid all litigation scenarios. What we do instead is provide litigation protection by way of proper documentation as well as education for you and your buyer. There are no guarantees, but in the past litigations against our sellers have been prevented, as well as cases where the mediator has sided with our sellers.

The key to litigation prevention is experience and knowledge, and this is what you get from experienced and knowledgeable business brokers like us. We know the kinds of issues that can arise, and we will not only help protect you if a claim comes up, we will make sure that everything is properly documented to avoid these issues in the first place.

Have you ever had an experience related to business transaction litigation? Have any advice for future business sellers? Do you have any questions about our approach to litigation prevention? Please leave a comment or question here, and we will be happy to get back to you.

Want to read Part 1: Confidentiality? Click here.

Want to read Part 2: Evaluation? Click here.

Want to read Part 3: Keeping Your Business Running? Click here.

Want to read Part 4: Marketing Power? Click here.

Michael Monnot

941.518.7138
Mike@InfinityBusinessBrokers.com

When you have made the decision to sell your business, one of the considerations you will need to address is whether to use the services of a business broker for the transaction. Do you really need a business broker, or can you just sell your business on your own?

The short answer is yes, you absolutely need a business broker.

What follows is the fourth in a series of articles listing the reasons why the services of a business broker are essential for a smooth and successful business transaction. Mistakes made during a business transaction, many made simply because of the inexperience of the business seller, can be extremely costly. The fees you pay to utilize an experienced broker can be more than justified by avoiding these major blunders.

#4: Marketing Power

On any given day there may be a multitude of potential buyers shopping the market, but how do you find the ones who are interested in a business like yours? If you try to sell your business on your own, will you have access to those buyers? The answer is probably not.

The way to solve this problem is simple, hire a business broker. A critical note here; make sure the broker you hire has the right kind of marketing exposure and access.

We offer a complete marketing package at no additional cost to you. We have multiple marketing strategies already in place that will provide the maximum exposure for your business.  We have a large network of local, national, and international buyers. We offer telemarketing, mailing, and e-marketing campaigns. We are on dozens of different websites. We have access to over 1,000 other business brokers, and we will market your business to all of their buyers as well.

We customize our marketing approach based on the type of business, the time you have before it needs to be sold, and for the type of buyer that would fit your business best. Rest assured if there is a potential buyer out there looking for a business just like yours, we will find them for you.

Do you have any questions about our marketing approach and how it will work for you and your business? Have you tried a particular type of marketing for the sale of your business that worked or didn’t work? Leave us a comment or question here, and we will be happy to get back to you.

Want to read Part 1: Confidentiality? Click here.

Want to read Part 2: Evaluation? Click here.

Want to read Part 3: Keeping Your Business Running? Click here.

Want to read Part 5: Protection from Legal Issues? Click here.

Michael Monnot

941.518.7138
Mike@InfinityBusinessBrokers.com

When you have made the decision to sell your business, one of the considerations you will need to address is whether to use the services of a business broker for the transaction. Do you really need a business broker, or can you just sell your business on your own?

The short answer is yes, you absolutely need a business broker.

What follows is the third in a series of articles listing the reasons why the services of a business broker are essential for a smooth and successful business transaction. Mistakes made during a business transaction, many made simply because of the inexperience of the business seller, can be extremely costly. The fees you pay to utilize an experienced broker can be more than justified by avoiding these major blunders.

#3: Keeping Your Business Running

The fact that you currently own a business that is doing well enough to sell is a testament to your abilities as a business owner. It is by your hand and through your day-to-day work that the business continues to succeed. Many owners think that because they are good at running a business, they will be good at selling one too. Unfortunately, this seldom is the case.

Did you know that it typically takes around 9 months to sell a business? In that amount of time, how much time will you as a business owner be able to devote to the business sale process? Will those hours spent qualifying dozens or even hundreds of potential buyers take you away from your day-to-day business operations? Will all of that lost time affect your bottom line?

Before you decide to forgo the services of a business broker, take a good look at factoring in the amount of time and money you are going to have to spend selling your business. Shifting your focus away from your business for 9 months will likely lead to lost sales and other neglected responsibilities.

During the sale process, you should be focused on building your business as much as possible, because buyers will know if a business is on the rise or sliding, and will pay more for a business that is doing well.

By hiring a broker, you can do what you do best, run your business and keep it in the black. The broker can focus on all of the marketing, take all of the calls, and qualify buyers for you.

Have you sold, or tried to sell a business on your own? Do you have any questions about how our services will let you focus on your business instead of the sale process? Feel free to leave a comment here. We look forward to hearing from you.

Want to read Part 1: Confidentiality? Click here.

Want to read Part 2: Evaluation? Click here.

Want to read Part 4: Marketing Power? Click here.

Want to read Part 5: Protection from Legal Issues? Click here.

Michael Monnot

941.518.7138
Mike@InfinityBusinessBrokers.com

When you have made the decision to sell your business, one of the considerations you will need to address is whether to use the services of a business broker for the transaction. Do you really need a business broker, or can you just sell your business on your own?

The short answer is yes, you absolutely need a business broker.

What follows is the second in a series of articles listing the reasons why the services of a business broker are essential for a smooth and successful business transaction. Mistakes made during a business transaction, many made simply because of the inexperience of the business seller, can be extremely costly. The fees you pay to utilize an experienced broker can be more than justified by avoiding these major blunders.

#2: Evaluation

Why is a business evaluation important?

You don’t want to ask far too much for your business because it may mean that your business never sells and you end up having to close the doors. On the other hand, you definitely don’t want to leave money on the table.

A proper evaluation of your business and knowledge of the current business market are critical for getting you the best price.

How do you get a proper evaluation of your business? Use the services of a business broker.

When you begin working with your broker, the evaluation of your business will mean an in depth look at both the positives and negatives of your business.  In regard to any negative issues you may have, your broker might be able to assist you in making small restructuring changes that would make your business more desirable to prospective buyers.

Just having a P&L or your tax returns will not do your business justice. Your broker will also be able to put together a proper presentation and package that will attract the right kind of buyer and get you the offers you are looking for.

Are you a business owner curious about what you could get for your business on today’s market? Has your business been on the market for what seems like forever and you’re beginning to wonder if you have it priced right? Leave us a comment or question here; we look forward to answering your questions.

Want to read Part 1: Confidentiality? Click here.

Want to read Part 3: Keeping Your Business Running? Click here.

Want to read Part 4: Marketing Power? Click here.

Want to read Part 5: Protection from Legal Issues? Click here.

Michael Monnot

941.518.7138
Mike@InfinityBusinessBrokers.com

When you have made the decision to sell your business, one of the considerations you will need to address is whether to use the services of a business broker for the transaction. Do you really need a business broker, or can you just sell your business on your own?

The short answer is yes, you absolutely need a business broker.

What follows is the first in a series of articles listing the reasons why the services of a business broker are essential for a smooth and successful business transaction. Mistakes made during a business transaction, many made simply because of the inexperience of the business seller, can be extremely costly. The fees you pay to utilize an experienced broker can be more than justified by avoiding these major blunders.

#1 Confidentiality

What is the most important reason to use a business broker?  A broker maintains confidentiality.

By using a broker you are ensuring the confidential marketing of your business to only those individuals who need to know the business is for sale. You, your broker, and potential buyers will need to know, but it is critical that list of those “in the know” stays short. It is also important that there are repercussions from a non-disclosure agreement if a deal with a potential buyer falls through. By using a broker, you are able to hide your business sale from competitors, vendors, and employees until the time is right to let everyone know the business is sold.

What can happen if confidentiality is breached? A bartender can take their loyal following of patrons to another establishment. A vendor can tell the competitor down the street that your business is for sale, and then you competitor can use that information to their advantage. Sub-contractors stop paying the contractor. Customers stop frequenting the business, or the entire staff quits.

Any of these circumstances has the potential to severely and adversely affect your business, especially if it occurs during the sale process, as a major loss of revenue can diminish the ultimate value a buyer places on your business.

Avoid these pitfalls by having a business broker maintain the confidentiality of your business throughout the transaction process.

Please feel free to leave a comment if you are a business seller who has had confidentiality issues in the past, or post questions here about how we maintain confidentiality while implementing our proven business marketing method.

Want to read Part 2: Evaluation? Click here.

Want to read Part 3: Keeping Your Business Running? Click here.

Want to read Part 4: Marketing Power? Click here.

Want to read Part 5: Protection from Legal Issues? Click here.

Michael Monnot

941.518.7138
Mike@InfinityBusinessBrokers.com

When a business seller has visions of the closing table, they might imagine the buyer handing them a big check, a check that repays all the hard work and sacrifice that culminated in this moment of moving on.

While this may occasionally happen, the reality of business transactions is typically a bit more complicated. One major consideration you as a seller must contend with is the tax implications of that “big check”.

While you will have business transaction professionals (like your business broker) who are well versed in the current tax implications of each financing option by your side at closing, it is critically important that you have at least a basic understanding of the taxes you will need to pay based on the payment method you ultimately choose.

Each option will benefit either you as the seller or the buyer, but not both, so these implications will likely need to be negotiated.

Here is a basic run-down of possible payment options you may encounter and the implications for each.

All-Cash Closing

This rarely happens, but sometimes a buyer will come to the table with an all-cash payment, and this means that you as the seller will get all of your money up front. Be aware that taking such a large payment all at once may push you into a higher tax bracket, and that restricting yourself to just buyers who have all-cash offers will severely limit the number of offers you could potentially get.

Financing from a Third-Party

A buyer might use third-party financing for a down payment or for the entire purchase price, but these types of loans can be fairly hard to come by in the current economic climate. One of the services your business broker should provide is getting your business lender prequalified with the SBA (Small Business Administration). If the third party loan covers the entire purchase price, this type of payment also carries the same tax warning as the all-cash option, as you will be receiving a large sum of money within a single tax year, and may push you into a higher tax bracket.

Buyer Self-Financing

A buyer who owns a home or property may be able to self-finance the business purchase by taking out a second mortgage on the property. A warning for this financing method, if you are offering seller financing for the remainder of a balance after a down payment secured by a home equity loan, do not accept the property as loan security.

Seller Financing

This is a common option for sellers in these difficult economic times, as it can attract more prospective buyers. By offering seller financing, you are showing that you have faith in the future of your business. This type of financing benefits both the buyer and the seller, in that the buyer can purchase a business without having to obtain third-party financing or come up with an all-cash offer, and a seller can spread out the proceeds of the business sale over many years, thereby eliminating higher tax rates.

Earn-out

In an earn-out, you as the seller are conveying your faith in the future of the business much like in the seller financing option, only in this instance you are staying on in an active role. As the seller, you will need to have the terms of the earn-out defined in the purchase contract as well as an understanding that it is mutually beneficial for both parties to remain on good terms. Much like the seller financing option, with an earn-out you can spread sale income over more than a single tax year, possibly giving you a tax advantage.

When deciding which financing option works best for you and your prospective buyer, rely on the experience of your business broker and on your own judgment in the negotiation process.

Are you someone who has recently bought or sold a business using one of the financing options mentioned above? How did it work for you, and do you have any advice for those just entering the business sale process? Leave a comment or question here.

Michael Monnot

941.518.7138
Mike@InfinityBusinessBrokers.com

If you are considering selling your business, your first step should probably be to find a business broker. A broker, as well as other business transaction professionals like business attorneys or business transaction CPA’s, can be vital to a smooth business sale. Even if you have already retained the services of a broker, it is important that you do some research on your own into the business market you are entering as well as the type of buyer who would potentially consider your business.

Knowing the market is important first and foremost because it will help you to have realistic expectations about your business sale, such as price and length of time on the market. Use industry publications and your broker’s market knowledge to discern if your industry is in a growth or slowdown phase.

A prospective buyer will be more interested in a business with the potential for growth. Even in a time of economic slowdown, you can market the growth potential of you individual business by highlighting ideas you may have had for growth but did not have the financial means or time to implement yourself.

Keep in mind that the economic state will affect the price your business ultimately sells for as well as how long it is on the market. Doing your homework in this area will help you to have realistic expectations and will also prepare you for any issues down the line.

Knowing who your potential buyers will be is instrumental for a successful business transaction. One source of potential buyers that many owners discount is a competitor or someone with a similar business model. Maintaining confidentiality is important in a transaction, but don’t discount a competitor who is looking to expand- they might be a great potential buyer for your business.

The other typical form of business buyer is someone looking to become a business owner as business investment. Those who are investing in a new business venture are mainly interested in what kind of return they are going to get for their money, so be aware of this aspect of the buyer’s perspective. Your business may be your baby, but don’t be offended when it just comes down to the numbers for a buyer.

Ultimately it will come down to your level of patience and your expectations if you would like to have a smooth business selling experience. Knowing your market and your buyers will help.

Have you recently sold your business in the down economy or did you sell to a competitor? Share your experience with us and with other business sellers here.

Michael Monnot

941.518.7138
Mike@InfinityBusinessBrokers.com