Companies That Sell Businesses
When people perform a Google search for companies that sell businesses they are typically searching for business brokers. Many of these are looking for information about the process of buying and selling a business, business valuation or advice on selling a business.
More often than not, those searching are relieved to find out that there are companies that sell businesses that are willing to help them through the nuanced transaction. Selling a business isn’t easy as it involves an accurate business valuation, confidential business marketing, legal, and accounting, landlords or real estate and business SBA financing expertise often to complete each transaction.
Buying And Selling A Business
What does the process of buying and selling a business look like? How do you sell your business? How does a buyer know completely what they are buying and if the business valuation is accurate? You can see why business owners are seeking advice on selling a business and why buyers are nervous and skeptical.
The chart below shows a general step by step process that the typical business owner takes in order to sell their business. As owners search for companies that sell businesses they typically find themselves working with a trusted business broker that will help them navigate the selling of their business.
Client Interview With Business Broker
The first step to selling your business is a simple meeting with a qualified business broker. Many times business owners search in their area to research Google Reviews of local business brokers and by searching business brokers websites.
We always encourage business owners to find business brokerage firms that have a team of business brokers. Searching their current active listings will also help you determine how many business owners in your area trust their services.
Both the business broker and the business owner are looking to build rapport and seeking to determine if they can work together relationally. The business broker is looking to find out certain facts about the business. Is the business profitable, does it have good books, what does local competition look like, and what is the motivation for the sale of the business?
Collection Of Information
Your business broker will need to see your books. Most will want to see the last three years of business taxes along with year to date Profit & Loss Statements.
Many professional business brokers will send you an online Seller Information Form. This information provides business data such as lease agreements, sq footage of space, Inventory, the reason for the sale, revenue, expenses, FF&E and leasehold improvements.
Your business will end up eventually in due diligence. A veteran business broker will spend painstaking hours during the collection of information so that your business will make it through due diligence.
Business Valuation
Selling your business will eventually be determined by the valuation you place on your business and the buyer's willingness to accept this valuation. Remember that business buyers are mostly concerned and motivated by the income they will receive if they buy your business.
Simply put, a business that produces $750,000 of income to the owner is valued at a greater price than a business that only produces an owner benefit of $42,000. Business buyers are NOT “potential” and they are not buying your businesses “best days,” ten years ago.
Business buyers today are savvy and educated. The SBA financing process will also impact your business valuation. Lenders want to know how quickly they will get their money back.
Remember also that each industry has it’s specifics multiples that are applied to their business. Generally the multiple is 2x’s owner benefit.
Marketing Agreement
There is a lot that has to happen for your business to go to market. Many business brokers charge an upfront fee to list and market your business while others charge no upfront fee.
Regardless, your business broker will review their marketing agreement so that you will understand the commission structures, exclusivity and other marketing agreement details.
Many business owners have bought and sold real estate so this process is familiar in many regards. The marketing agreement is your signal to your business broker that they can go to work on your behalf.
Executive Summary
Your business broker will go to work on your business’s executive summary. A professional executive summary is the first impression that your business will make on potential buyers so it needs to look great and it needs to be accurate.
Your business broker needs to show you an example of their executive summary and you need to be wowed by its professionalism. Your business history, your role in the business, your clientele, the numbers, marketing strategies, growth potential, and many other details will make up your professional executive summary.
Confidential Marketing
When someone wants to sell their home, they want everyone to know. When a business owner decides to sell their business they can’t put a sign up on their front door. Business owners do not want their employees, customers, landlord or their competition to know that they are selling their business.
Business brokers market businesses using general descriptions and terms. The only things that aren’t general are the numbers for the business. When buyers are inquiring about a business they will be asked to sign a NDA and a Marketing Agreement.
Buyer And Seller Meeting
After the correct forms have been signed, your business broker will set up a buyer/seller meeting for more interested buyers. Qualified buyers will have many questions that need to be answered.
Typically, buyers want to hear the business history, meet the owner, take a tour of the business and ask an assortment of other questions. Business buyers will want to know why “Your company is for sale?”
Offer & Negotiations
Once the buyer has reviewed the numbers, met the owner, learned more about the business and toured the business they will be prepared to make an offer. After an offer has been made there is typically a bit of negotiating before the final price is agreed upon.
Companies That Sell Businesses
Fortunately, there are companies that sell businesses thus reducing the risk and headache of this process for business owners. These companies that sell businesses offer professional and confidential services that aid business owners.
Business owners have a business to grow, employees to lead and business decisions to make. When a business owner prepares to sell their business, the last thing they can do is abdicate the responsibility of running and growing their business.
Companies That Sell Businesses: Services
The services of companies that sell businesses include:
Business Valuations – Business owners want to know their business valuation and business buyers want to know how this valuation was calculated. During due diligence, the recasting of numbers are carefully considered and hopefully verified if the business broker has done their job correctly.
Confidential Business Marketing – When someone wants to sell their house, they want everyone to know. When selling a business the opposite is true. Companies that sell businesses have a long track record of successfully maintaining confidentiality.
Legal Documents – DNA’s, Marketing Agreements, Buyer’s Offer Documents and Closing Statements used have each been reviewed legally to verify that they meet state metrics and requirements.
Vetting & Qualifying Buyers – Business owners do not have time to waste with tire kickers, nor do they want everyone in town having their sensitive and personal information. Companies that sell businesses ask buyers to complete a buyers profile and an NDA prior to sending information about the business.
Negotiating The Deal – When people negotiate there is a lot of emotion involved. Companies that sell businesses help remove the emotion as much as possible so that an agreed sells price can be reached. Business owners typically give up 30% profit when they negotiate on their own behalf.
Due Diligence – Due diligence is where many business deals unravel and fall apart. This time of intense investigation requires expert and professional attention. It is reported that as many as 50% of all business deals die and this is one of the primary reasons that business owners hire the professional help of companies that sell businesses.
Real Estate or Landlord – Most businesses have a brick and mortar location. Working through the lease with a landlord or the sell of real estate is another service that companies that sell businesses perform.
Financing – How is the buyer going to pay? In the majority of business sales, financing is required. Business brokers help advice and more the deal forward as financing is being secured.
Deal Control – Business sales involved a lot of “Type A personalities:” business owners, buyers, attorneys, accountants, and landlords. Someone has to quarterback the deal and keep everyone in check as the deal moves to the closing table.
Closing – Getting a business deal to the closing table is extremely difficult. There is one positive outcome with thousands of pitfalls that could happen at any moment.
Companies That Sell Businesses: Transworld Business Advisors
There are several reputable companies that sell businesses. I respect many of the others that we work with here in our Raleigh market. I do not have time to do a deep dive into all of these but I will share info about the one that I work with and know the best - Transworld Business Advisors of Raleigh.
Transworld is the largest business brokerage in the world with offices in 16 countries and $3.5 billion in active listing inventory. Transworld Business Advisors began in 1979 with the passion of “Helping good people do good deals.”
Last year, we helped close to 2,000 business owners sell their businesses. As a company that sells businesses, we are one of the most trusted names in the industry.
Business Valuation
Are you considering the sale of your business? Our company has helped more business owners accomplish this than anyone in the world.
The first step is knowing the valuation of your business. Contact one of our business brokers today for an accurate and complete business valuation. swright@tworld.com
View our current business listings.
