Selling a Business FAQs
SB M&A has been in the business of helping people sell their businesses for many years. Our well-trained professionals bring an unparalleled level of expertise to the business sale process.
Below are some frequently asked questions about selling a business. This information is designed to help you better understand the business selling process and to explain the advantages of using a professional business intermediary to manage the sale. If you have additional questions, please contact one of our offices directly. We will be glad to assist you.
Below are the general steps your SB M&A intermediary will guide you through when selling your business:
- Help you identify the goals you expect to meet with the sale of your business.
- Prepare a business analysis and Most Probable Selling Price report.
- Help prepare your business for sale.
- Develop a marketing strategy and marketing materials.
- Market your business confidentially. Your employees, customers and competitors will be unaware that your business is for sale.
- Screen potential buyers before presenting them to you.
- Work with you to arrange meetings with potential buyers (this may include evenings and weekends).
- Begin negotiations between you and the potential buyer when both parties feel comfortable proceeding.
- Help you evaluate each offer based on the marketplace, competitive bids and your personal goals.
- Manage the negotiations, keeping your interests in the forefront.
- Facilitate due diligence and manage professional processes with hired professionals.
- Work towards a successful closing of the deal on a timely basis.
- Assist with transition preparation and transfer of operations to the new owner.
Support the initial interaction and training processes with the new owner.
A more detailed outline of the selling process is available by downloading Selling Your Business with SB M&A.Register here to download this free brochure.
Frequently Asked Question About Selling a Business
What can I do to help sell my business?
As we begin the process of selling your business, there are many things you will need to do:
- Maintain normal working hours.
- Make sure your financial records are an accurate reflection of revenues, business expenses and assets/liability levels.
- Conduct business as usual while maintaining normal inventory levels.
- Keep the business clean and in good repair.
- Remove equipment or furniture that is not part of the sale.
- Provide us with required information in a timely manner.
- Be as accommodating as possible in setting appointments to meet with buyers.
How can SB M&A assist me in determining the value of my business and establishing an asking price?
SB M&A provides its clients with a thorough business evaluation called our Most Probable Selling Price analysis. On the open market, an evaluation of this scope and detail would cost many thousands of dollars, we charge a small fee for this evaluation.
Your intermediary will explain the importance and value of this document as well as the detailed analysis that goes into its development.
How does SB M&A market my business to potential buyers?
SB M&A has the expertise and reach to be able to market to the right prospects locally, nationally and internationally. Your business will receive broad exposure across our network, augmented by appropriate offline and online marketing initiatives to reach your prospects.
Our proprietary buyer-matching systems also allow us to search our internal database of thousands of registered buyers to identify prospective buyers whose profiles match your business.
What types of offers should I expect to receive when I sell my business?
An astute buyer will typically start with an offer that is substantially below your asking price. This initial offer is normally used as the first step in the negotiation process to “test the waters”. All offers will contain contingencies, including a review of the books and records, obtaining a satisfactory lease, and agreement on training and transition periods. Other contingencies specific to your business may also be included. Contingencies are normal as they provide the buyer with the opportunity to verify the information presented in the marketing materials. They also provide some negotiating room for the purchaser as the process moves forward.
How long will it take to sell my business?
There are many factors affecting the length of time it takes to sell a business including: asking price, the buyer’s ability to secure financing for the purchase of the business, the business’ location, local economic conditions, the nature of the business etc. Consequently, there are wide variations in the amount of time required to sell a business, however, a selling period of six to twelve months would be the typical.
Does SB M&A qualify the buyer financially?
No. We usually ask for a signed personal financial statement from the buyer and try to get a sense of the validity of what is presented by asking questions, but we do not initially verify that the information submitted is correct. If negotiations become serious and there is any question of financial capability, we are authorized to run a credit check and will do so if appropriate. If you are financing a substantial part of the purchase price, you should verify income and asset and liability information as carefully as a bank would.
Will I have to provide financing to the buyer?
In Canada, because financing for small businesses is quite difficult to acquire from banks and traditional lending institutions, seller financing is a part of most small business acquisitions. Seller financing also makes sense for both the seller and the buyer for a couple of reasons. First if the seller is willing to provide financing, it shows the buyer that the seller believes in both the earning power of the business and the skills of the purchaser to make sufficient return on investment to cover the financing. It also works for the seller, because businesses that include financing typically sell for more than businesses without seller financing. In some cases, the ongoing payments and interest on the loan also suit the interests of the seller.
Will the buyer pledge any additional collateral for my loan?
When a buyer buys a business, he/she does so based on the business being able to generate sufficient cash flow to pay your loan and provide him/her with an income to meet their needs. However, a seller will typically ask for a personal guarantee on the financing provided.
How long is the training period for the buyer?
There are no firm rules regarding training, and many businesses have more complex learning curves than others. Your intermediary will negotiate the best arrangements for you depending on the type of business you are selling and your personal circumstances. Remember, if you are financing any portion of the purchase price you still have a financial investment in the business, thus, proper training of the buyer is in your best interest.
When should I tell my employees I plan to sell my business?
Although it sounds harsh, our considerable experience has proven that it is best not to tell your employees about the sale until immediately before or immediately after the sale. Of course, if there is an employee whose expertise will be needed after the sale, you should introduce the buyer to this employee shortly before closing. Your intermediary can assist you in determining the timing for notifying employees of the sale.
What are SB M&A’s fees?
SB M&A Broker’s commissions are competitive in the market place. The commission is performance based and therefore contingent upon the successful sale of the business and SB M&A generally is able to secure a selling price of 30% more than sale by owner or through lesser channels so the result is that using SB M&A does not cost the seller but increases the net proceeds to the seller. You can discuss specific terms and conditions with your SB M&A business intermediary.
When it comes to selling a business Sunbelt wrote the book!
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