Why is seller financing so important?
Better price (70% vs. 86% for seller financed deals)
Quicker sale since no 3rd party financing is required.
Helps to convince buyer of seller's belief that it's a good company.
In most cases, all cash deals do not happen.
What is the business worth?
The marketplace decides and it does not matter what the seller wants or needs.
What are the first steps to do to actually sell the business?
Gather information: 3 years profit and loss statements; Tax returns; FF&E list; Real Estate lease; Franchise agreement if appropriate; inventory details. Have tax advisor determine how much you get to keep after taxes. Decide if you really want to sell the business.
Who are the buyers?
Early retirees or those dissatisfied with their jobs
Those seeking more control
People with $100k-250k for down payment or total purchase
Those willing to take the leap of faith to risk purchasing & operating a business
What do buyers want?
Buyers seek cash flow adequate to pay the debt service and a living wage (with an amount left over for contingencies or return on investment). Further, they'll want the seller to stay and train them for a negotiated period of time with no additional cost.
What questions will potential buyers have?
What makes the business unique / special / different?
Why are they selling if it's such a good deal?
How can buyer add value and grow the business?
Is the current owner replaceable?
What's the competition and current market place position of the business?
Does the buyer need any special qualifications, such as licenses, certifications, etc.?
What can a seller do to help sell their business?
Keep normal business hours
Do not let inventory slide
Keep financial records current & accurate
Remove items not part of the sale
Keep the business looking good inside and out — first impressions count
How long does it take to tell a business?
Current owner should plan to own it for the rest of their work days or plan to operate it accordingly; however, 8-12 months is a reasonable time frame with a competent business broker to sell the business.