BUSINESS SELLER’S QUESTIONS & ANSWERS
WHEN IS THE BEST TIME TO SELL MY BUSINESS?
Among the top reasons business owners sell are health issues and burnout, followed by family/matrimonial concerns, boredom, a yearning to pursue different or other endeavors, long or undesirable hours, wanting to relocate, problems with partners, customers or employees, weak sales and profits or high sales and profits, advancing age, and retirement. Some of these reasons offer a Seller little or no choice but to sell “now”; however, if a business owner has control of the timing, then the best time to sell is when the business is worth the most and when there are growth opportunities.
WHAT CAN I EXPECT ONCE I DECIDE TO SELL MY BUSINESS?
Many business owners encounter emotional swings when putting their “baby” up for sale. You may feel that that you are abandoning your “baby” to someone who probably will not pour his or her heart, soul, sweat, tears and financial investment into the business as you did. As difficult as this all might seem, you must constantly remind yourself to remain focused on the goals which led you to your decision to sell. The selling process may be long and tedious, but if your business is priced consistent with the market and supported by reasonable seller financing, in due course you will be at the Closing table ready to embark upon your new post-Closing life.
WHEN I DECIDE TO SELL, DO I HAVE TO DO ANY PREPARATION WORK?
Yes…We strongly advise you to review and if need be, clean up your financial statements, protect intellectual property if not yet done, trim debt and expenses wherever possible, eliminate obsolete or old inventory, resolve any litigation issues, and generally spruce up, organize and clean your entire facility. Remember, a clean and organized facility leaves a great first and lasting impression with an interested buyer, and further leads to the impression that you are organized in your financial and business records, as well as with employees and customers. All this helps in promoting a buyer’s offer to purchase and in achieving the highest price.
CAN I RELY UPON THE CONFIDENTIALITY OF MY SALE?
Yes… We will take every step possible to ensure that confidentiality is preserved throughout the marketing and selling process. The first thing we do with an interested buyer before releasing any information whatsoever is to obtain a signed Confidentiality Agreement. We try to schedule meetings with the business Owner/Seller either before or after regular business hours, but if scheduled during regular business hours our visit to your place of business would be under the guise of an “insurance agent” or “salesman”, so as to avoid possibly alerting your staff, customers, and vendors of your interest to sell. That being said, unfortunately, our experience has shown us that the business Owner/Seller is most often the one who innocently or inadvertently breaches the code of confidentiality. He may tell his wife, members of his family, friends and perhaps other third parties who all promise to keep the news confidential, but many times don’t. Also, in small close-knit communities, once a local buyer or a local buyer’s agent from the buyer’s brokerage firm has been given your name or the name of your business in scheduling a meeting with you to show your business, it is nearly impossible to maintain confidentiality. Throughout all of our marketing efforts we attempt to screen the process beforehand, and when advisable we strongly remind the buyer of his signed Confidentiality Agreement.
WHY DO I NEED A BUSINESS BROKER TO SELL MY BUSINESS?
There are many valid reasons, but perhaps the paramount service we provide is the ability to allow you to remain focused on operating your business stress free and without distraction. Other valuable reasons to retain a business broker are to: (1) insure confidentiality, (2) offer guidance on establishing value and the terms of sale, (3) share with you our knowledge of the business sale/purchase market, (4) prepare ads and advertise for public viewing on multiple listing services most often at Broker’s cost, (5) be your contact person to answer questions, furnish information, and schedule buyer appointments, (6) pre-screen buyers and seek to reduce the number insincere “lookers”, (7) pre-qualify the genuine buyers on their background and financial qualifications, (8) negotiate price and terms on your behalf (always with your input and approval) since you may be too emotionally involved and unable to effectively negotiate, (9) draft a buyer’s Offer, (10) act as an escrow agent, (11) offer guidance in seller financing or SBA financing, and (12) numerous other related services- all on a contingency basis with the commission payment expected only as, if and when the business is sold.
WHAT IS THE COMMISSION I WOULD HAVE TO PAY LIST SELL BUY?
At the outset, none. Our commission is solely on a contingent fee basis. If you don’t enjoy a level of success by selling your business, then neither do we. This gives you the assurance that we will exert our strongest efforts in your behalf. Our main incentive is to sell your business, and when we do, then, and only then, do we receive our reward at the Closing.
Note that in setting forth our fee structure below, we may be one of only a few business brokers nationwide who will inform you of its fee structure up-front, and even place it on our website for public viewing. This is prompted by our desire to be open and straight forward with you from the outset, unlike the vast majority of brokers who often hold back and “spring” the commission on you at the last moment.
Our commission fee structure is consistent with those of most other business brokers in Westchester County and elsewhere. Sometimes even less. However, if you believe there are special circumstances affecting you or your business, we will listen and where warranted, we will modify our fee accordingly. Our general fee structure is two part:
For the typical “Main Street” small business selling between $50,000 and $1,000,000, depending on various factors our fee is in the industry range of 10% to 12% with an agreed minimum; and
For a middle market business selling for over $1,000,000, we utilize what is known as the Double Lehman scale: 10% on the 1st $1.0M of value, 8% on the 2nd $1.0M, 6% on the 3rd $1.0M, and 4% on the remainder, also with an agreed minimum.
ARE THERE TIMES WHEN YOU ASK FOR AN UP-FRONT EXPENSE FEE?
Yes, BUT ONLY IN RARE INSTANCES. We like to sell businesses and we want to sell all the businesses we can for all business owners who want to sell, but in so doing, we expend considerable time, money and effort in advertising and promotion costs which we are willing to incur without any repayment guarantee from you in the event your business is not sold for any reason. This is the risk we take and gladly do so. However, there are some businesses which, from the outset, are extremely difficult to sell, and in such cases, we also will exert our fullest efforts but, because of the limited likelihood of success, we have established the following advance fee structure.
If you furnish reliable Income Tax Returns and/or Income & Expense Statements for at least 2 calendar years which substantially report the financial picture of your business, then all things being equal, we will not ask for any up-front fee to cover all or a portion of out-of-pocket costs we will be incurring.
- In the event you do not have or are unwilling to furnish us with complete Income Tax Returns and/or Income & Expense Statements for at least 2 calendar years which substantially report the financial picture of your business, but you desire to list your business for sale with LIST SELL BUY based solely upon substantially incomplete Income Tax Returns and/or Income & Expense Statements, or if none are available, based upon your assurance to LIST SELL BUY that you can prove your gross income, cost-of-goods, expenses and net income from other reliable sources, then of necessity, we reserve the right to request an up-front fee to defray all or a portion of our out-of-pocket costs and expenses which we will be incurring. On any sale, we will credit this fee paid by you against the full commission due.
If you ask us to list your business based solely upon (i) your estimate of future value, or (ii) a Pro-Forma Statement, or (iii) a part year only, or (iv) a non-operating business, or (v) an asset sale having no or little financial data, then we reserve the right to request an up-front fee to defray all or a portion of our out-of-pocket costs and expenses which we will be incurring. On any sale, we will credit this fee paid by you against the full commission due.
DO YOU OFFER A COMMISSION DISCOUNT TO A SELLER WHO HAS DEMONSTRATED HIS OR HER PATRIOTISM TO GOD AND COUNTRY?
Yes, very much so. Please click on the Tab entitled “Patriot’s Discount” and there you will see our discount program extended in remembrance and appreciation of those business owners who have given so much for God and Country.