IBA, as the premier business brokerage firm in the Pacific Northwest, is firmly established as a respected professional service firm in the legal, accounting, banking, mergers & acquisitions, real estate, and financial planning communities. Periodically, we will post guest blogs from professionals with knowledge to share for the good of owners of privately held companies & family owned businesses. The following blog article has been provided by Seth Rudin. Mr. Rudin is a senior business broker at IBA (www.ibainc.com):
Ensuring the Deal Closes: The Owner’s Role in a Business Sale
Business Transition Essentials: A Look at 4 Key Areas
Selling a business is no easy task. To successfully reach an exit strategy, the transaction will require negotiation, teamwork, coordination of multiple professional parties and some grit to say the least. Many business owners do not initially realize the complexity and the numerous moving parts associated with selling their companies until after they have finished a business sale. However, the process can be stress-free, quick, and a wonderful experience with a M&A intermediary. Then and only then, the seller can wipe their brow and appreciate what they and their business broker accomplished.
There are five main phases to selling a business:
- Planning, Evaluating the Business, and Preparing the Company for Sale
- Marketing the Business to Buyers
- Vetting Buyers and Negotiating the Offer(s)
- Completing Due Diligence and All Related Contingencies
- Closing and the Business Transfer (Getting Paid!)
Selling your business can be seamless and easy. It is vital that the seller fulfills their part in synch with their business broker and maintains the business as if it were NOT for sale. I like to coach my clients to “put the pedal to the metal.”
1. Sellers play a vital role, starting with preparing the company for sale.
- Gather all applicable financial information: leases, employment agreements, inventory assessment, equipment lists, patents, trademarks, marketing programs and other legal documents that buyers may commonly request.
- Organize the offices, manufacturing facilities, storefronts, etc. to make a good first impression on potential buyers.
- Collect & Cultivate Google Reviews and any other relevant platform reviews sharing customer satisfaction.
This vital information assists the business broker in creating a thorough professional valuation and the eventual marketing packages used and provided to prospective buyers.
2. Most importantly, the seller should run their business as if it is not for sale but for growth.
Selling a well-run company is much easier than selling a declining business or one that continues to lose money month over month. Business sellers should note that buyers are more likely to pass on a business with declining YTD income statements or, if they remain interested, these declining financials will impact the price they are willing to pay.
3. Sellers play a critical role in vetting their successors – the buyer.
During scheduled Buyer-Seller meetings, the seller will usually meet the buyer face to face. This is a time for both parties to know, like, and trust one another. This is not a one-and-done transaction. Selling a business is selling a living and dynamic business entity, a professional business sale intermediary should facilitate these meetings.
Owners want to know and trust the future buyer as there are often employees involved that the sellers care about dearly, longstanding client relationships and a local brand being transferred.
Some transactions will include seller financing or earn-outs that require the seller to trust and believe in the buyer to run the business so the seller gets paid. At this point, a broker will guide the sellers to ask all the questions necessary to vet the buyer’s trustworthiness, managerial skills, professional background and value system. The sellers also need to come across trustworthy and loyal to honor their commitments to complete post sale obligations like transition consulting.
4. Your broker will guide you through due diligence.
The seller will be actively partnering with the business broker to fulfill obligations during the due diligence period to finalize buyer requests, banking inquiries, definitive purchase agreement / purchase and sale agreements, landlord negotiations, and other such duties to reach closing.
As a business brokerage, IBA has facilitated over 4,300 business transfers and has learned from each transaction in helping the seller navigate to deal close. We help sellers who are considering selling their businesses to help them prepare the companies for sale, and to guide them through full sales cycles to make the business transfer more timely and financially beneficial.
If you have questions relating to the content of this article or the process associated with selling or buying a privately held company in Washington or Oregon, Seth Rudin would welcome the opportunity to talk with you. Mr. Rudin is licensed to sell businesses & real estate in both Washington and Oregon. Mr. Rudin can be reached at (425) 454-3052 or seth@ibainc.com.
IBA, the Pacific Northwest’s premier business brokerage firm since 1975, is available as an information resource to the media, business brokerage, mergers & acquisitions, real estate, accounting, legal, and financial planning communities on subjects relevant to the purchase & sale of privately held companies and family-owned businesses. IBA is recognized as one of the best business brokerage firms in the nation based on its long track record of successfully negotiating “win-win” business sale transactions in environments of full disclosure employing “best practices”.