Preparing to Sell Part 5- Qualify, Site Visit, Negotiate

Qualifying Buyers

If you don't have a process to qualify prospects, you may find yourself dealing with tire-kickers, wasting lots of time and resources trying to sell them your business. There’s no bigger waste of time than working with a buyer who will not be able to complete a transaction.

In addition, you should require buyers to submit some basic information:

·        Name and all contact information.

·        Previous employment and business ownership.

·        Educational background.

·        Funds available to invest and sources of financing.

·        Minimum monthly income requirement.

·        Intended timeframe for completing a transaction.

·        Reason for interest in your business.

Your business broker should have a process in place for qualifying buyers.

Site Visit

Once a buyer has been qualified, signed a confidentiality agreement, reviewed your business profile, and shows continued interest; the next step is typically a site visit.

I suggest that these visits be scheduled after hours for confidentiality and to allow you to focus on the buyer. This is your one chance to "sell your business" so it is imperative that you be on top of your game. A tour is usually the best way to start the site visit as it will generate a lot of good questions and give you an opportunity to present your business in a favorable light.

It is highly recommended that your business broker be there to document disclosures made between seller and buyer and to answer any questions relating to terms and conditions and the process should it continue.

Negotiating the Deal

After you’ve found a qualified buyer, provided a business profile and had an initial site visit, it is time to stop the flow of information and ask that an offer be presented. This can take the form of a nonbinding letter of intent or a written offer. It should spell out the terms of the deal so that all parties can move forward in good faith.

All sellers hope to get a full-price cash offer for their business. But in the real world this rarely happens. More often buyers will make a down payment and pay the remainder in installments to either you or a lender. Don’t be disappointed by an offer that doesn’t meet your expectations. It is not uncommon to counter-offer the original offer. A willingness to be creative with the terms of a transaction can go a long way toward a successful sale. Your business broker can be the creative "glue" that holds the deal together. Also, be sure to enlist your accountant to help you assess the tax consequences of the terms you accept.

Once the terms have been agreed upon by both parties (offer and acceptance) it is time to open an escrow account. Your business broker can walk you through the escrow process, costs, and timeline. Depending on the complexities of the deal, plan on allowing approximately 30 to 60 days to close escrow.

Navigating the escrow closing process takes careful attention and daily follow up.  This is where a skilled business intermediary or broker can really help.  As the say goes: ‘Nothing happens until the sale is final.”  Business sale transactions can easily fall apart during the escrow period unless momentum to close the transaction is sustained by careful attention to detail