The Process of Selling Business

The process of successfully selling a business follows a pretty specific blueprint.  Once an owner decides to take that step, he or she should talk to a qualified business broker to list the business for sale.  

The financial records of the business will determine in large part the value of the enterprise.  It cannot be overstated that the better the books, the higher the quality of the valuation.  Although a CPA's job is generally to maximize a seller's tax position, if a seller can plan far enough in advance, the tax return can be focused on showing the strength of the cash flow to the seller.  This increases the value for sale.

Once value is established, an experienced broker has several avenues to advertise, confidentially, that the business is for sale, including BizBuySell and Crexi. The broker should create a Confidential Business Review ("CBR") that contains specific financial and industry specific information that adequately describes what a buyer will be purchasing.

After the valuation has been determined, the CBR prepared and the business listed for sale, the seller has two jobs: continue the operation of the business and be patient.

Statistics show that it takes between 3 and 9 months to sell a business in the United States.  Once a potential buyer contacts the broker, the broker obtains a Non-Disclosure Agreement ("NDA") to keep the process confidential. 

When the buyer signs the NDA, the buyer is given the CBR.  If the business appeals to the buyer, the broker will arrange a Buyer-Seller meeting and a viewing of the business.  At no point during this process should the buyer contact the seller's employees, drop by the business for a secret shopper-style viewing or contact any of the seller's customers or vendors.

If the buyer then wishes to enter into negotiations for the purchase of the business, he or  she prepares, with the assistance of the broker or in some cases the assistance of their own financial or legal advisors, either a purchase offer or a letter of intent. The seller may wish to counter some of these terms of purchase.

Once  an agreement has been reached, a closing is held.  The seller is paid and appropriate documents of conveyance are executed.  The buyer then owns the business and has the right and privilege of operating the business from then on.