Selling A BusinessSelling A Business

Frank DugganFrank Duggan

What YOU Need to DoWhat YOU Need to Do

• Buyers will demand a tremendous amount of info. You must know the following:– Selling price– Partial or Full– Pay attention to your business during sale– Ins and Outs of your business– Clear financial statements– Fees assessed with selling

• 10% Broker fees

WHO Can Help YOUWHO Can Help YOU

• Business Brokers– Acts as an agent for an owner looking to sell a

business– Maintains confidentiality– Can utilize his/her own contacts for sale– Also can act as a intermediary between

parties

Management AgreementsManagement Agreements

• Seller may be asked to continue to run the business after the sale

• Continue to run cash flow analysis because this will be the basis of the sale

• It Depends:– Selling your business depends greatly on the market

and the economyGenerally businesses sell for

significantly less than the asking price

AttorneysAttorneys

• Things to do for the attorney:

– 1. Prepare a circular or prospectus summarizing your business for potential buyers

– 2. Prepare a purchase and sales agreement

Employees and Qualified BuyersEmployees and Qualified Buyers

• Make sure employees hear about the potential sale of the company

• Rumors may breed nervousness

• Tire Kickers

• Judge quickly

Assisting QuestionsAssisting Questions

• Have you ever bought or owned your own business before

• What is your time frame for buying a business

• What other types of businesses are you looking at

• Do you have adequate cash to buy the business

The Buy and SellThe Buy and Sell

• Seller may need financing– Ask in advance– Solid collateral to protect your loan– Sell or lease hard assets for profit– Offer a rate a few point higher than commercial banks

• Buyer– Owners are said to put ridiculous asking prices. Says your not

serious about selling– Determine bottom line price– Be serious– Prepare statements and other info in advance– Consider customers, suppliers, and vendors as potential buyers

AdvertiseAdvertise

• Business opportunity section

• Sunday papers

• “Blind” ads by using the publications address for inquires

• Run a small ad

How LongHow Long

• Small business– 2-6 months

• Larger business– 6-12 months

What FailsWhat Fails

• You’re the same old song and dance

• Diversify with less power than all in one area

• Change strategy too often