Are you a business owner contemplating the sale of your business and how to sell your business? At Pacific Business Sales, we understand that selling a business isn’t just a financial transaction; it’s a big decision that will impact the entire organization, the company legacy, and your retirement or next endeavor. Our team has more than 20 years of experience in business sales, and we’ve successfully facilitated countless transactions, ensuring that business owners like you receive the maximum value for the sale of their business and hard-earned investment.
If you are considering selling your business, it’s important to be well-informed and prepare for the sale of your business. Selling a business is not merely a matter of putting up a ‘For Sale’ sign and hoping for the best. It’s a multifaceted undertaking that demands careful planning, strategic execution, and a deep understanding of the market dynamics as well as how to facilitate the transaction itself.
We recognize the importance of addressing the questions and uncertainties that often accompany the decision to sell a business. Whether you’re in the early stages of considering a sale or ready to sell your business now , we’re here to help you optimize your transaction.
In the following sections, we’ll unravel the intricacies of selling your business, offering insights and expert advice to help you navigate your business sale with confidence.
How do I prepare my business for sale?
In order to maximize the value you receive from your hard work, time and investment, you should follow certain steps to prepare for the sale of your business. Ensure that your financial records including income statements (P&Ls), balance sheets, tax returns, and other relevant financial documents are not only accurate but also up-to-date and well organized.
In reviewing your financial statements, make sure your owner’s salary and benefits are well documented and shown on your P&L. It’s best not to have any “owner’s” personal expenses show in or comingled with COGS (Cost of Goods Sold) or operational expense line items such as Utilities, Marketing, Janitorial, Deliveries, etc. because SBA lenders will generally disallow owner’s benefits that are commingled with operational expenses as they are too difficult to verify. Owner’s personal/nonbusiness expenses are acceptable in expense categories such as Officers’ Salaries, Travel, Meals & Entertainment, Insurance (personal health and life insurance), Auto & Truck (with proof of personal vehicle expenses), Retirement/401K (with statements), etc.
Another important step in preparing to sell your business is to streamline your operations by adding systems, cross cross-training employees and managers to make the business less owner-dependent to appeal to more buyers who are attracted to businesses that look like they will have a seamless transition.
How do I set the right asking price?
Once your financial statements are in order, the next step is to contact a Business Broker for a Market Value Report to determine the value of your business. Pacific Business Sales offers a Free Market Value Report for prospective clients. There are DIY valuation reports available, however, unless you have a good understanding of recasting financial statements it is doubtful the results would be an accurate market value.
Setting the right asking price for your business is a pivotal step in the sales process that requires a thorough understanding of your business’s financials, market conditions, and industry-specific valuation methods.
Valuation methods include a market analysis that involves comparing your business to similar businesses that have recently sold in the same industry or a financial assessment that considers your business’s earnings or cash flow to assess profitability and determine the market value and asking price. Pacific Business Sales uses Peercomps.com professional business valuation software for our Market Value Reports. Peercomps has comparable sales data from the appraisals of thousands of SBA-financed business transactions by industry. As part of our Free Market Value Analysis, we will review your financial statements, calculate your DE (Discretionary Earnings) and EBITDA, determine your company’s market value, and review the results with you. If you are considering selling your business now, we discuss the recommended asking price and the range we expect offers to come in at.
If you’re planning to sell in the future we discuss what can be done to improve the market value and marketability of the business.
How do I find the right buyer?
Buyers come in various forms, each with their own motivations and expectations. Types of buyers include strategic buyers who are typically established businesses looking to expand or diversify their company’s operations, financial buyers who are often private equity firms, individual investors who are interested in buying a business where they intend to be the owner-operator, or competitors who may see value in acquiring your business to expand their company’s footprint or product-service offering.
Confidentially advertising your business, driving inquiries for the sale of your business, and sifting through prospective buyers after they have signed an NDA is one of the roles of your business broker. when you engage a professional business broker. Your business broker will handle the initial buyer meetings to screen the buyers and answer their general questions about the business. After the initial buyer-broker meeting, the broker will arrange a meeting with you and the prospective buyers either by Zoom for the first meeting or after hours if an on-site meeting is required.
Your business broker will coach you on what questions to expect from buyers, how to prepare for the buyer meetings, and facilitate the meetings to keep things on track.
How do I market my business effectively?
Marketing isn’t just a buzzword; it’s a tried and tested strategy that greatly improves the advertising visibility and Click Through Rate of your business for sale ads, thereby your chances of attracting the right buyer for your company as well as reducing the time on market. At Pacific Business Sale all our business for sale ads are written to preserve the confidentiality of the business for sale and at the same time, have headlines that grab attention with copy that drives inquiries.
A comprehensive business-for-sale marketing strategy will showcase and feature your ads on business-for-sale websites, articulate the business’s value, maximize exposure, and attract buyers interested in your business In addition to featuring your business for sale which puts your ad at the top of the listing page results, we also send buyer email blasts to both the BizBuySell.com buyer email list and our internal buyer email list of over 3,000 buyers.
How long does it take to sell a business?
The timeline for selling a business can vary widely based on several factors, including the type of business, its size, market conditions, and the readiness of the business for sale. On average, it can take anywhere from several months to a year to complete a business sale depending on the industry, business size, and of course asking price.
Complex transactions may take longer, while well-prepared and attractive businesses tend to sell more quickly. Working with an experienced business broker can help expedite the process by identifying qualified buyers, streamlining negotiations, and the transaction closing process.
Why You Should Choose Pacific Business Brokers to Sell Your Business
Selling your business is not a decision to be taken lightly. It’s a significant step that can have far-reaching consequences. Partnering with Pacific Business Brokers, you won’t need to worry about the FAQs above, because we’ll take care of it for you.
The first step we take is answering all your questions to make sure you are comfortable with our process, experience, confidentiality, and more. Then, we will prepare a Free Market Value Analysis prior to listing your business to determine market value. We do not charge any upfront fees, and work hard to ensure you get the maximum value for your hard-earned investment. We also prepare the Confidential Information Memorandum (CIM) for your business which is the prospectus sent to buyers after they sign an NDA.
At Pacific Business Brokers, we have a proven track record of connecting sellers with the right buyers. Our CRM database contains 3,000+ active buyers across various industries. We leverage our database to quickly connect with buyers actively seeking businesses like yours.
We create tailored marketing strategies that resonate with specific buyer types, ensuring your business is presented in the most appealing way possible. In addition, we take confidentiality seriously, protecting the identity and sensitive details of your business while generating interest from potential buyers. Our extensive network within the business brokerage community and professional organizations like CABB and IBBA allow us to co-broker with other experts, expanding the reach of your listing.
By partnering with Pacific Business Brokers, you gain access to a wealth of experience, resources, and connections that can significantly enhance your ability to find the right buyer for your business. Our approach is not one-size-fits-all; we tailor our strategies to your unique needs and goals.
Contact us today to get started selling your company.
