If you have been on the market a while and your business hasn’t sold, you aren’t alone. Not all businesses that list on the market sell the first time around (within the first listing agreement timeline). Most listing agreements are for one year, and the average time it takes to sell a business is in the neighborhood of 9 to 12 months. Just as there are things that will definitely hurt your chances of selling, there are a few things that can help you if your ultimate goal is the closing table.
Have the right broker.
Like any industry, there are great brokers and there are brokers who are not so great. Having an experienced and qualified professional selling your business will definitely help you on your way to a closing table. A good broker should answer your phone calls and emails in a timely fashion, should recast your financials to make them easy for buyers to understand, should bring you buyers who are appropriate for your business, should have a comprehensive marketing package to distribute to those buyers, should hold the confidentiality of your business sale to the highest priority and should have your business listed in all the places buyers (and the brokers for buyers) will look. Some businesses are tough to sell, whether it’s because the business is very niche or the market isn’t bringing the right kind of buyer, so if your broker is doing all of the things we listed and your business still hasn’t sold in the first year – it might just be a matter of time and patience until the right buyer comes along.
Sure, everyone would love to get millions and millions for their corner cafe, but the reality is your business is only worth what someone is willing to pay for it. We see businesses languish on the market indefinitely because sellers (or bad brokers) forced the listing price too high, and it scared any potential buyers off. The pricing conversation you have with your broker is very important, as you want to get the biggest return on your investment while still pricing it to sell. A big dose of reality will help you actually achieve those goals.
Be forthcoming with records.
A good recast of your financial records is essential to show buyers what benefits they will get by buying your business, but a good recast only happens when you give your broker and prospective buyers complete access to the information they need. We see deals fall apart because sellers refused to provide information, or because requests for information went unanswered or took too long. No one is going to pay for a business they haven’t been able to see, so be prepared to be forthcoming with documentation like tax returns and leases. Buyers will also have questions, lots of them. Sellers who seem unwilling to answer questions give the impression that there is something to hide, so answer questions truthfully and in a timely fashion.
You will get caught. You will also get caught trying to withhold information that you think may be damaging to the image of the business, so just don’t do it. There is no such thing as a perfect business, and most buyers are willing to overlook even moderate issues so long as they know about them from the start. We have seen deals fall apart over dishonesty too many times. Lying about profits, about taxes that are due, about the motivation for selling – during due diligence the truth will come out and it will more than likely kill your deal.
Transaction success is possible with the right help, realistic expectations, a cooperative attitude, complete honesty and a good dose of patience.
Has your business been listed for a while and doesn’t seem to be attracting buyers? Are you frustrated with what your broker is (or isn’t) doing to market your business? Please leave us a comment or question here, and we would be happy to help you with getting your business sold.
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Fort Myers, FL 33907