- Why should I use a Broker to sell my business?
- How long does it take to sell a business?
- What is my business worth?
- How do you ensure employees do not know the company is for sale?
- How will you find a buyer for my business?
- What does a broker charge to sell a business?
- How do we get started?
- Why should I buy a business when I can start one myself for less capital?
- How can a Broker help me buy a quality business in my industry?
- What financing is available for first time buyers?
- What is the best offer strategy?
- What is due diligence?
- How do we get started?
Selling your business is a difficult personal decision that carries many risks. It will likely be the largest financial transaction of your lifetime. Exit strategy and timing are crucial to the value of your company. The best time to sell a business is when it has a steady stream of cash flow and clean, clear financial documents. The business sale process in most cases takes 6-12 months.
As Transaction brokers, we at the Crestone Business Group are highly experienced with the process of finding the right buyer who will share your enthusiasm and passion; one that will offer you the full market value for your company. Our consultive sales approach guides both buyers and sellers through the complexities of the transaction. Services our sellers enjoy include confidentiality, customized marketing and advertising, screening and qualifying potential buyers, and negotiation with sophisticated buyers and investment groups.
Why should I use a Broker to sell my business?
One out of five businesses in the U.S. change hands each year. While most owners are experts at running their particular business, they are likely unfamiliar with the technicalities and processes involved with selling the company. Selling a business is a long, challenging and time consuming process. FSBO sellers often underestimate the value of their company and receive considerably less than fair market value at closing. Lacking credible professional assistance, many FSBO transactions also experience transactional issues resulting in dissatisfaction and even legal problems.
At the Crestone Business Group, we specialize in helping first-time sellers. We do all the work and manage the process so you can run your business. Our team will assist you through the myriad of tasks associated with the sale process, including valuing your company, developing custom and confidential marketing and advertising, answering questions from “tire-kickers”, screening and prequalifying buyers, negotiation, due diligence and closing. We will work with your attorney and CPA as necessary throughout the process to safely address all technical aspects of the transaction.
How long does it take to sell a business?
There are many factors that influence the length of time to sell a business. These include industry, accuracy of business financials, market appeal, and whether commercial financing will be required by the buyer. The normal time range for most sellable businesses is 6-12 months.
What is my business worth?
There is no clear cut method for valuing a business with absolute accuracy. Valuing a business for sale to a third party is different than valuing a business for tax or estate purposes. When valuing a business for sale to a third party, it’s important to get the number right. If the valuation is placed too high, the business will never sell. When a business is undervalued, the seller stands to leave a significant amount of cash on the closing table.
The two components of importance in a company’s market price are tangible asset value and intangible asset value (goodwill). Both are subjective. The three main approaches to valuation are asset based, income based and market based. The value of your company is likely influenced by all three to some extent.
Most small to midsized businesses are valued by their earnings potential and asset value. The buyers of these companies are predominately concerned with cash flow, as that allows them to receive a salary and return on investment after paying the business loan.
For larger businesses, an EBITDA calculation (Earnings Before Interest, Taxes, Depreciation, and Amortization) is often used to determine cash flow. We frequently help sellers of larger businesses obtain an independent third party business valuation to ensure accuracy and minimize buyer negotiation. Volume our firm generates for third party valuators typically results in a significant discount for our clients.
How do you ensure employees do not know the company is for sale?
Most sellers strive to keep a pending sale confidential. Prematurely alerting key employees, suppliers and competitors to a pending sale can cause disastrous results. An experienced business intermediary knows how to maintain confidentiality in search of potential buyers. We employ non-disclosure agreements for all parties. Advertising is done through a blind business profile using many different genres. Unlike a commercial real estate offering, no sign will appear on the building. We rely on experience and common sense when dealing with buyers. The firm has never suffered a breach in confidentiality.
How will you find a buyer for my business?
We are experts at generating the two most important marketing documents that will direct a buyer to your company. These are the blind business profile and confidential marketing book. Our firm uses a number of advertising approaches to get the blind business profile in front of a large pool of national buyers and investors of all demographics. Once a prospective buyer contacts us, we require a non-disclosure agreement and will prequalify them. Assuming the buyer has the right background and financial resources to buy your business, we will send them the confidential marketing book containing a detailed description of the business including a summary of recasted financial data and additional business facts that your buyer will need to consider.
What does a broker charge to sell a business?
For the most part, fees are earned on a success basis and paid at closing. If we do not sell your business, you do not pay a commission. Our fee agreement will be fully disclosed prior to any commitment. In general, brokerage fees in Colorado are fairly competitive and consistent. While a commission is payable when a broker is involved, the broker’s value added to the transaction typically exceeds the commission fees.
How do we get started?
We welcome the opportunity to help you reap the value you’ve worked so hard to build. The first step is a brief, private meeting for you to learn more about the buy/sell process and to answer any questions regarding exit strategy and ownership transfer. Please feel free to contact us to learn more. Your inquiry will be held in the strictest confidence.
Successful business owners share the traits of enthusiasm, drive, and organization. Entrepreneurs are energized by challenge and the ability to call the shots. When an entrepreneur buys a business, they get more than simple assets. You will buy and control a cash flow that can be expanded with fresh ideas and new operational or marketing perspective.
We appreciate buying the right business will likely be one of the most important decisions in your life. As Transaction Brokers, we employ a consultive sales approach with clients, coaching buyers and sellers on industry outlook, exit strategy, business valuation and commercial funding. The Crestone Business Group specializes in business sales and acquisitions of firms in the mid-market segment, ranging in price from $150,000 to over $10,000,000. We offer a wide variety of high cash flow businesses for buyers and investors and smaller affordable businesses that are perfect for first time business owners. See our most current Colorado listings here.
At the Crestone Business Group, all the businesses we sell share one common trait, they are profitable. Whether you are a first time buyer or are a seasoned investor, you can count on us to shepherd each business transfer through negotiation, due diligence and closing, maintaining a positive outcome for owners, employees and stakeholders.
Why should I buy a business when I can start one myself for less capital?
Business startups are very risky, which is why the vast majority eventually fail. In the initial startup phase, products and services are under development, as are marketing, advertising, and infrastructure. Most importantly, there are no sales or customers. Sometimes the cash outlay on a startup is much higher than buying an established business. Buying a profitable, established business will provide recognized products and services, existing marketing, advertising, customers and suppliers, and most importantly a predictable cash flow.
How can a Broker help me buy a quality business in my industry?
Professional business intermediaries can help refine your search criteria to find a business that fits your individual tastes and financial requirements. Many times a broker will show you an attractive business you may not have even considered. We have access to a wide selection of businesses for you to consider.
What financing is available for first time buyers?
Many business purchase transactions require some form of financing. Stringent new financial regulations placed on the banking industry have made it more difficult for buyers to find loans these days. We have a wide network of banking institution contacts that may be able to help you with commercial or SBA funding. When appropriate, we will also help you negotiate seller financing.
What is the best offer strategy?
Once you’ve met the owner and toured the business, you will be excited to move forward. Since most sales involve privately held businesses, buyers are typically required to make a commitment before reviewing the business’ internal financial records. We will help you develop an offer of purchase or letter of intent with the appropriate contingencies, and negotiate the transaction. It is the buyer’s responsibility to verify the accuracy of the seller’s representations through exercise of due diligence. Buyers are encouraged to reduce the risk of pathfinding through the use of professionals – CPAs, attorneys, and appraisers.
What is due diligence?
Time is of the essence, and the buyer must complete a review of the business in a judicious manner. Once an offer to purchase has been accepted by all parties, buyers will typically be given 5-10 days to complete a systematic review of the business books and records, perform inspections, and take appropriate steps to verify the seller’s representations. When the due diligence process is completed and any contingencies are removed, the contract becomes binding. Should the business fail to pass due diligence review, the prospective buyer may request an earnest money refund, and they may withdraw, modify or amend the offer to purchase.
How do we get started?
We welcome the opportunity to help you find the business of your dreams. The first step is a brief, private meeting for you to learn more about the buy/sell process and to answer any questions regarding ownership transfer and financing. Please feel free to contact us to learn more.