One of the most important decisions a business owner can make is determining who to sell their business to. It’s not an easy decision, and it should not be taken lightly. The process takes time, effort, and a lot of thought.
There are many factors involved when selling a business, such as type of company (i.e., manufacturing vs service), size of company, industry vertical, location, competition in the marketplace, and more. Business brokers play a very large role in this process because they will be responsible for finding buyers and negotiating the sale on behalf of the seller(s). They also provide advice about valuation, which is critical since it affects the final sale price of the business.
Here are some of the things business brokers look for when evaluating a business.
1.Tax Matters
The broker will want to know if any impending tax issues could impact how much you can sell your business for. They may also ask about any previous audits your company has endured, which allows them to formulate a plan for bringing your business to market.
2. Current Assets and Liabilities
For sell my business purposes, this is all about knowing exactly which assets are included in the sale and what obligations are involved. If you don’t have an exact number, business brokers will make an estimate based on their knowledge of similar businesses. The selling price is usually determined by the net value, so it’s critical to have a good handle on how much your company is worth.
3. Intangible Assets
This includes things such as trademarks and patents that are either owned or being applied for. Many sell my business transactions include these assets in the sale if they fit with the products/services provided by the company. Otherwise, you are free to sell them separately. Any intangible assets tied to what a buyer is acquiring should be included in the sale process since they could affect the final selling price.
4. Location
Your broker will consider where your office is located since proximity can be important in certain industries such as retail or manufacturing. Many companies today do most of their business over the internet. They don’t necessarily need to maintain an office unless all/part of what the business does depends on face-to-face contact with customers or clients. But if your business does require geographical presence, then this won’t be an issue.
5. Confidentiality Agreements
Brokers will look at any confidentiality agreements or non-disclosure agreements you may have signed with employees, clients, or business partners. This is a big one because if you have signed anything promising not to discuss certain information about the company, your broker will want to make sure that you are upfront about this with any prospective buyers. Remember, if a buyer finds out you have been less than completely honest, they can back out of the buyout.
6. Management Characteristics
It makes sense for your business brokerage to consider this aspect of a sale since it deals with what type of buyer might best suit your company culture. For example, an entrepreneurial-minded manager will likely do better in some businesses than others where decision-making authority is limited by corporate hierarchy or other external constraints.
What Type of Business Broker Do I Need to Sell My Business?
This will depend on the niche your company is in and the specific industry verticals within that market space. For instance, if you sell an airline franchise, then sell-side brokers whose specialties lie in aviation are more effective than those who do not have such experience. Those with specialties may be better at locating buyers within their niche, thereby raising the chances of selling quicker and for a higher price.
You should choose a sell my business broker based on experience, expertise, and references. Doing so will help you sell quickly rather than having to sell it yourself without any leverage. If you are looking to sell your business, contact Transworld Business Advisors for a free business valuation today.