- 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 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.