Daily Archives: January 24, 2018

How to Find and Qualify Buyers when Selling a Business

A business broker San Diego is charged with the responsibility of helping you find the right buyers and speed up the sale process. All in all, even when working with an experienced broker, it pays to learn a thing or two about the sale process. By understanding how brokers search for buyers and how they qualify them, you will be more competent to sell your business. Below are the important pieces of information you need to know.

Before advertising
Although maintaining confidentiality is important, it is good to tell your employees and even trusted suppliers, clients, distributors and manufacturers about the sale. This helps build goodwill which would otherwise be lost if they feel you are selling behind their back. You might even find a genuine buyer within this group. Second, you need to come up with a good reason why you want to sell. If your reason is not good, you might even have trouble finding the best business brokers San Diego to work with.

Types of buyers
The second thing you will need to do is to understand the different types of buyers that might come knocking at your door. The buyers fall in three key categories.

  • Financial buyers

These are buyers that are interested in the cash flow of your business. They will be interested in investing your business rather than running it. Such buyers will focus more on your financial records. They only invest in healthy businesses. Your business broker San Diego can pitch your business to financial buyers if this is the type of sale you are considering.

  • Strategic buyers

These are buyers who want to acquire your business so that it works as part of their own business strategy. This will mostly be people running similar businesses. They can buy your business so as to open a new branch where your business is located. These buyers are normally buyers ready to pay the most for your company. The more your products are aligned to theirs the higher the price they will pay.

  • Business insiders

These are the people who know you. They include family, friends and employees. These buyers understand a lot about your business and they often have personal reasons for buying your business. They may pay more than outside financial buyers. However, they are more likely to require capital for the outright purchase.

Qualifying buyers
The golden rule to remember is that not everyone that shows interest in your business has the means to buy it. This is why one of the main duties of business brokers San Diego is to qualify buyers. Below are some tips you should use when qualifying potential buyers:

  • Don’t disclose all the details about your business right away.
  • Inform buyers of the ballpark figure then assess their reaction.
  • Ask about their financial ability to buy your business.
  • Know if they have experience owning or running a business
  • Remember a desire to buy isn’t an ability to buy

The sale of a business can be overwhelming. This is why you should consider working with a business broker San Diego throughout the process.

Business broker San Diego

Documents Buyers Will Want to See before Buying Your Business

Business brokers Orange County understand that to convince a buyer to consider the purchase of your business, you must provide proof. This proof is seen in the paperwork. When getting ready to sell a business, it is vital that you make ready all the documents that pertain to your business. In this article, we will be taking a look at the primary documents that you will need.

Due diligence
The first thing that any serious buyer will do is conduct a thorough investigation of your company. This is known as due diligence. It is done within a period that has been specified in the letter of intent. It is only with due diligence that the buyer is able to determine the value of the business as well as the risks that come with buying it. The buyers will consider the following things:

  • Business operations
  • Legal and tax compliance
  • Financial performance
  • Customer contracts
  • Assets
  • Intellectual property

At times, a buyer will want to observe the operations of your business, examine the procedures and processes, analyze the finances of your business and evaluate the risks that are associated with your business. Because of the sensitive nature of this involvement, your business broker Orange County will draw-up a foolproof non-disclosure agreement that buyers have to sign before due diligence.

When getting ready for the buyers’ due diligence, it is imperative that you prepare the relevant documents. Below are the main documents that buyers will want to see.

Financial records
Nobody wants to spend money on a dying business unless the price is right and they have a way of saving it. The first documents a buyer will ask for is the financial records. These will tell him if your business is doing fine or not. Your business brokers Orange County will help you know which documents will be needed. The main documents include the following:

  • Current balance sheet
  • Profit and loss statements for the last 24 to 36 months
  • Bank loans and letters or lines of credit
  • Cash deposit records
  • Outgoing costs breakdown
  • Details of the company’s automated financial systems

Business operations
A buyer will also want to know how your business operates. Here are the documents you will need to gather:

  • Stock inventory list
  • Supplier accounts
  • Utility accounts
  • Business history
  • Asset list
  • Audit work paper files if available
  • Insurance details

Legal documents
Has your business been operating legally? The buyer will ask for these documents:

  • Work health and safety guidelines
  • Client contracts and trading agreements
  • Franchise agreement
  • Employee contracts and agreements
  • Leases

The above are the essential documents you will need. Your business broker Orange County will help you get them ready. However, before you disclose these documents to buyers, you must do due diligence. Ensure the buyer can secure the finances that are needed to buy your business and assess the experience they have running a business. Don’t ignore the buyer’s future plans for your business.

Business brokers Orange County