As a small business owner, it is in your best interest to behave in an ethical manner throughout all aspects of the day-to-day operations of your business. This is important if you want to keep clientele, keep a good reputation, and keep your doors open.

This need for ethical behavior comes into sharp focus if you are trying to sell your business because behaving unethically, especially in your disclosures to a buyer, can not only kill a deal, but wind up in the middle of a lawsuit.

So what steps can a seller take to remain above board during the business transaction and ultimately protect them from litigation? Here are a few options:

First, hire the appropriate professionals. Liability can hide anywhere within a business transaction, so if you try to go it alone you risk walking into liability trouble you didn’t know was there. An experienced business broker can be instrumental in avoiding legal pitfalls, as they should know where some of the liability dangers are. You may also need the services of an experienced business transaction attorney.

Second, be open and honest with your books. Your financial “dirty laundry” will be aired out during the due diligence phase of the business transaction, so it is important to be honest during this phase. You may be liable if you disclose inaccurate financial information, or even if you choose to not disclose issues with your business. It is important to realize that any inaccuracies or misrepresentations will likely be discovered, and if they are, you risk a lawsuit.

Third, be sure that you put everything important in writing and that you read absolutely everything you sign. If you find yourself in a lawsuit, having written records will be instrumental in proving that your hands are clean.

Lastly, if you have any investors or partners, you will all need to be on the same page before you bring a buyer into the mix. It sometimes happens that one business partner will feel that the sale has benefitted one partner at the detriment of the others, and this can lead to legal liabilities.

If you are looking to sell your business, and have concerns about the ethics of a business transaction, please leave us a question or comment here and we will be happy to answer your concerns.

Michael Monnot

941.518.7138
Mike@InfinityBusinessBrokers.com

If all of the stars aligned for a business owner, they would sell their business when the market is hot and there is a great demand for their type of business.

The reality of the market, however, is many business owners end up having to sell when not only external factors are hurting their chances of an ultimately profitable sale, but internal factors within their business are hampering their chances at business sale success.

The economy is completely out of your control, so the best advice a business owner can take is to plan ahead for the aspects of your eventual business sale you can control. There are a number of things you can do prior to the time you need to sell that will make your business more appealing to potential buyers.

If you were looking to sell your house, you would likely make any necessary repairs and give the walls a fresh coat of paint. You can make these same kind of simple improvements to your business as well, giving you a leg-up when buyers come looking.

For example, that freezer that’s been leaking or the doorknob that keeps falling off should be repaired and replaced if necessary. Make sure that your business is clean, as the most common feedback from buyers is “the place was filthy/gross/dirty”.  A fresh coat of paint, both interior and exterior is also a good idea if needed.

Another aspect that can appeal to buyers is nice-looking books. Go through your financial records, and assemble them in a way that will give a prospective buyer an easy look into the business’ finances.

The key to a successful sale is to plan your exit strategy early. Once your business is listed on the market it can take 9 months to a year to complete the sale, so planning way ahead is far better than feeling the pinch of having to sell in a short time span.

If you had to sell without preparation, chances are you won’t get top dollar for your business. You may be forced to take the first offer that rolls in, and if you haven’t made any pre-sale improvements, those things that will need to be completed by the new owner will likely affect the price your business sells for.

Are you a business owner who is thinking about the eventual sale of your business? Leave us a question or comment here and we will be happy to assist you with your pre-sale preparations.

Michael Monnot

941.518.7138
Mike@InfinityBusinessBrokers.com

You may have asked how do I sell my business and who do I list it with: a realtor, commercial agent or a business broker?
The best analogy I can assimilate this to is that you would not go to the optometrist to fix a tooth. Although both are Dr’s they have different specialties as well as different tools, much like a business broker has for selling your business.

#1 Tools
A realtor has the MLS and a commercial realtor has Loopnet. I have an optimized site to buy and sell a business, subscriptions to many business for sale sites, nearly 900 cooperating business brokers in my network, a direct marketing campaign specific to your business and access to all of the information to make it successful, I have a database of buyers, investors, CPA’s, immigration attorneys and lenders to distribute the basic listing information for all of their interested clients.

#2 Confidentiality
Unfortunately I have seen confidentiality breached many times and many different ways. I have seen pictures of the business in the MLS, the name in the description and sometimes a note to not bother the employees. Last week I was in a meeting with my buyers and the listing agent was a realtor and he exposed the business to an employee. This can create a loss of employees, clients may not come back and I have even seen receivables not be paid. I will confidentially market the business, it will not be divulged to anyone that we have not spoken to and interviewed, all clients will also sign confidentiality agreements and information will not be shared with employees, vendors, competitors or anyone we feel will not have the ability to purchase your business.

#3 Professional Marketing Package
A pictures, paragraph and a P&L will not sell a business anymore. Rarely do I receive a professional marketing package from another business broker but have never received one from a realtor or a commercial agent. My marketing package will include a complete financial recast along with a SWOT analysis, a complete business profile to give a buyer an idea of what is needed to run the business, owners and employee duties, history, projections, video, pictures, asset lists and so much more. My marketing packages will typically start at a minimum of 10 pages for a very small business and will go to 20, 30, 40 and more pages.

If there are any additional questions ask for an existing listing to review, ask for proof of completed transaction, marketing methods, confidentiality forms, processes…if you receive any hesitation you should not be dealing with that business broker.

Michael Monnot

941.518.7138
Mike@InfinityBusinessBrokers.com

You’ve been all the way through the business transaction process, and you’ve just left the closing table, now what?

The time you’ve spent getting your business from the listing to the close of the sale has probably been very hectic and stressful, so the good news is that particular weight has been lifted from your shoulders. There will be no more late nights getting together financial documents, no more balancing running your company while trying to make time for all that selling your business requires.

Now that the business is sold, it is in the hands of a new owner, and this can be a troubling experience for some sellers. In most sale arrangements, the old owner agrees to stay on for a time for training and/or consulting work, or even as an employee for a while. No one is going to run what used to be your business exactly like you did, so the key to maintaining a friendly relationship with the new owner is to not be too upset with any changes they choose to make. This is especially true if you offered to finance part of the sale, as you want to be sure that you eventually get paid in full. Be optimistic about changes, and try to see them as a new direction for the company brought on by the creativity of the new owner.

Even if you have agreed to stay on for a period of time, it is likely that your role in the business will be substantially less than it recently was, so enjoy the break from responsibility. Your involvement should decrease fairly quickly to a point where you are no longer needed.

The next step for you will be deciding what to do with the proceeds of your business sale. If you are entering retirement, then the services of a financial planner are probably in order. If you still have many working years ahead of you, you might consider business investments that will keep you active and earning. Many ex-entrepreneurs find it hard to let go of the business owner life, and many decide to invest in or buy another business. Ask your business broker about the options you may have to either purchase outright or invest in (without having a heavily active role) another business venture.

As a business owner, you have worked night and day on your business, so perhaps the best thing to do after leaving the closing table is go on a well-deserved vacation! Whatever you decide, be sure to seek the advice of professionals like financial planners and business brokers to end up at the best decision for you.

Have you just sold your business and are looking for a new business venture? Leave us a question or comment here, and we will be happy to assist you on this next stage of your life!

Michael Monnot

941.518.7138
Mike@InfinityBusinessBrokers.com