5. Price, Structure & Terms - Buyer Financing Depends on It
Statistics show that sellers who ask for all cash receive, on average, only 70% of the list price, while sellers who accept terms typically receive 86% of the list price.
In many other cases, businesses that are listed for all cash just don't sell.
So, it's clear that by offering some financing in the sale of a business, that an owner can increase the selling price they will receive. Here's a breakdown of how these concepts interplay:
Price is ultimately the 'number' - the list price of the business, of which the seller decides.
Structure encompasses a wide range of details including asset versus share sale, assets included/excluded in the sale and surplus working capital/investments all of which affect the deal and need to be ironed out with a Broker before going to market.
The Terms of a deal are related to whether the seller is requesting an all cash deal or is willing to look at a combination of cash & terms with a prospective purchaser.
With reasonable terms sketched out with a Broker before locating a potential buyer, the chances of a sale increase dramatically, and the time period from listing to sale, greatly decreases.
SMost sellers are unaware of how much interest they can generate by financing the sale of their business. What's more, seller financing tells the buyer that the seller is confident about the ability of the business to pay for itself.
Seller financing is one of the simplest and best ways to finance an acquisition, with a common deal structure of 1/3 seller financing. Many sellers actively prefer to do a portion of the financing themselves, thereby increasing the chances for a successful sale and the best possible price.
6. Resolve Deal Breakers
Prior to selling a business there are often potential deal breakers that go unnoticed by an owner. A Broker is experienced at identifying and alleviating these potential pitfalls that can reflect poorly upon a business if unveiled to the market prior to correcting. For example, some pitfalls may include but are not limited to: permits, licenses, financing, blemishes, agreements, leases, etc.
7. Importance of Representation
The Broker is equipped with negotiation experience that increases your chances of a sale. A Broker will uncover the bargaining power of the buyer, and understands how that individual plans to finance the purchase of your business. In addition, the Broker will anticipate the buyer's concerns and counsel an owner about being up-front about any problems that might make a buyer suspicious and unnecessarily adversarial during the negotiation process.
Stepped in knowledge about negotiating price, terms and other vital aspects of the sale, the Broker will guide you each step of the way.
A Broker acts as the 'middle man' and works to achieve your ultimate strategic and tactical financial goals without any hassles.
These Important Things to Know Before Selling a Business, give you an advantage in putting your 'best foot forward' in the process of a successful sale.