1. Keep the business clean and organized (on paper and in person), so potential buyers will like what they see.
2. Liquidate or set aside obsolete inventory and unneeded equipment before you place the business on the market.
3. Notify Tait & Associates of any material changes in your business.
4. Forward quarterly financial statements to Tait & Associates as soon as they are completed. This will keep your marketing package current.
5. Do not meet with potential Buyers without your broker being present.
6. Avoid direct negotiations.
7. All offers and counter-offers should be in writing and should be presented by the broker.
Down payment or the “terms” are a key factor, because a buyer is trying to buy as much business as possible for the money available for down payment. So, when a seller asks for $200,000 down on a $400,000 value business, buyers prefer to continue looking until a $600,000 value business is found where the owner will accept $200,000 down and finance the balance. The seller who asks for all cash or a large down payment is not going to succeed in obtaining the full fair market value of their business, because buyers know they can buy three times as much business for the same investment. In a nutshell, high percentage down payments cause buyers to discount offers.
A second critical factor is the quality of the information provided to a prospective buyer. The value of the assets and cash flow generated by the business must be provable and verifiable. Tait & Associates will be able to assist the business owner in arriving at these values.
The third most important factor that effects the sales price of a business is whether there is competition among prospective buyers for the business. Competition creates higher selling prices, as we all know from basic economic principles. When a business owner asks for more than the fair market value for their business or does not offer reasonable terms, there will be few, if any, Buyers interested in acquiring the business. On the other hand, when a business is priced realistically and with proper terms, multiple Buyers are likely to pursue acquiring the business. A Buyer who knows he has other Buyers competing for the business will be motivated to offer the price being asked to ensure he does not lose the business to another Buyer's better offer. .
The first thing you need to do is offer the business at a realistic price and with reasonable terms. You need to provide as much information as is possible so a professional marketing package, including a business profile, can be prepared on your company. The quality of the business profile will greatly enhance the “saleability” of a business. A package prepared by Tait & Associates will contain financial, operational and historical information about the business. Informed Buyers make better offers! Other things a Seller must do are:
Because Tait & Associates does not have the intimate understanding of the business and its operations, and certainly not the level of knowledge the owner has, we must therefore work as a team. Tait & Associates initial job is to get a business listed at the best possible obtainable price and with realistic terms of sale. The next step is to qualify Buyers to keep the Seller from wasting time with people who are not financially qualified. Qualified Buyers will be presented your business profile only after they have completed a Confidentiality Agreement, financial profile and personal profile. Tait & Associates will then schedule a meeting between the business owner and the interested Buyer. During this meeting, the business owner will explain the business to the Buyer. After this meeting, Tait & Associates will work to get a Letter of Intent or written offer to purchase. Tait & Associates will present all offers and after acceptance will coordinate the due diligence process that will lead to the closing.
Several factors come into play and can affect the sales price. One of the most critical are the “terms” or the amount of down payment and the amount financed. Over eighty percent of all businesses sold above $100,000 are sold with one-third or less down and the owner financing the balance. Asking for one-half down will reduce the price by approximately twenty percent. Asking for cash will reduce the price to about forty to sixty percent of the amount attainable with one-third down.
The advertising of each business will depend upon the size and type of business. Tait & Associates uses multiple media sources to solicit prospective Buyers, including national newspapers, the Wall Street Journal, trade publications and the Internet. In addition, qualified Buyers from other affiliate offices, corporate acquirers and investment groups will see your listing. Local newspapers are used as little as possible, because it is often more difficult to protect confidentiality when a business is advertised locally. Tait & Associates also uses other top business listing sites on the Internet.
The process of buying or selling a business requires dedication and the attention of a professional with the knowledge of the complete flow of a business transaction, as well as a team in place to accomplish every aspect of the transfer. Marketing and facilitating a business transfer is a full-time job! You deserve someone who will work as hard as you do. Tait & Associates will save business owners and prospective buyers money by helping them avoid costly mistakes, effectively marketing the business, and maximizing exposure to serious, qualified buyers... All with complete confidentiality.
Why should you use Tait & Associates to sell your business? There are many reasons... Most importantly, Tait & Associates offers business owners the opportunity to have the largest business brokerage network in the world working to sell your business not just one local broker.
Finding one prospective buyer is insufficient. Creating competition among multiple buyers should be a brokers goal, not to just find a single buyer. A buyer without competition feels free to offer less than the full value of a business. When a buyer knows several other buyers are looking at the same business, they are hesitant to offer less than the price and terms being solicited.
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As a member of the Texas Association of Business Brokers network, TABB, Tait & Associates has affiliate offices covering every state in the nation. No local brokerage firm even comes close. An individual living on the West Coast, for instance, who wants to relocate to the Southeast would find no value working with a broker locally because the broker would not know what was available outside the local market. As a result, a prospective buyer would need to go from broker to broker in the desired area. This only causes frustration and a waste of time, and seldom, if ever, results in completion of a business sale. Now prospective buyers can contact Tait & Associates and the prospective buyer will have access to listed businesses from affiliated offices in the desired area.
Another factor to consider is packaging. Poor packaging of a business opportunity is one of the major complaints expressed by buyers. We have been told by hundreds of buyers that Tait & Associates has the best and most professional packaging in the industry, thus ensuring our sellers that we are effectively representing their business. All our agents use standardized and detailed packaging, which, in addition to its appeal to prospective buyers, makes it easy for other Brokers to quickly understand and evaluate your company. When a prospective Buyer is presented the information on your business, the Buyers will be able to have most of their questions answered and be able to make an informed buying decision.
CONFIDENTIALITY is vitally important when working with any broker during the selling process. The last thing any Seller wants is to have employees, customers, venders, competitors or creditors finding out their business is on the market. Tait & Associates protects information about the business for sale, we require a signed Confidentiality Agreement from all potential buyers. In addition, Tait & Associates requires potential buyers to provide proof of financial ability to acquire the business and if their background and work history is a match to operate the business being purchased. The Seller can then make an informed selling decision, all within the confines and security of confidentiality.
If you are interested in selling your business and don’t know the answer to any of the questions below, you could benefit from the assistance of Tait & Associates (and you are not alone!).
1. How do you reach qualified buyers, including possibly competitors without disclosing your intentions to sell?
2. How do you evaluate your business objectively to ensure you receive top dollar for your investment and avoid costly negotiating tactics?
3. How do you prepare and provide the information a prospective buyer will require to interest him in pursuing your business in favor of other options?
4. How do you arrive at the best price and terms, including the intangible and goodwill values of your business?
5. How do you maximize your favorable exposure to potential offers while minimizing your potentially damaging public exposure to customers, competitors, employees, and suppliers?
6. How do you market your business in all of the appropriate markets, databases, and media efficiently, effectively and confidentially?
7. How do you screen and pre-qualify buyers, determine their motivations, managerial capabilities, and financial strength?
8. How do you effectively sell your business, without devoting significant time, effort and resources to that process and at the same time continue to manage your ongoing business productively?
Business owners have focused their entire lives on growing and developing their businesses and seldom know how to answer all of the questions above. That is where Tait & Associates can come in. The sale of your business demands a professional, just as running your business has demanded your professional attention. Tait & Associates has the expertise, tools, and professional team to market and sell your business successfully on a national basis. The objective is to protect your business investment and maximize your net after tax profit on the sale. It is to your advantage (and your broker’s as well) to obtain the best possible price that a reasonable buyer will pay. Tait & Associates strives to maintain high ethical standards and communicate in an open and honest manner in all business relationships.
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