Bearing in mind that selling a business can be time-consuming and frustrating, hiring a business broker San Diego is the first thing you should always do. The reason for this is because the business broker will take over the sale so that you can focus on the core operations of your business as the business is being sold on your behalf. But what are the real benefits of working with a business broker?
When you want to sell a business, the last thing you want is for word to get out about the sale. If your employees, customers, lenders, and suppliers learn of the sale they might abandon you in fear of the uncertain future. This will in turn cause the value of your business to decrease. Working with business brokers San Diego ensures that this never happens. Business brokers use blind ads to market your business. What is more is that they know how to maintain confidentiality and are not directly associated with your business which means chances of word getting out will be small. With the help of a business broker, nobody will learn about you selling your business until you want them to know.
It takes more than 6 months to sell a business. During this time you will have to meet up with buyers, negotiate with them and do it all over again. When selling the business on your own this can be overwhelming. The amount of work required to market and discuss with buyers can even cause you to neglect the core operations of your business. This is, however, not the case when working with a business broker San Diego. Business brokers guarantee continuity by taking over the sale so that you can focus on the health and operations of your business until you transfer ownership. Chances of the value of your business going down due to neglect are minimal when using a business broker.
When you partner with a business broker, you will benefit the most from maximum coverage. The broker will give you maximum exposure to their huge network of buyers and use their experience to give you the best results in the sale. You should also note that buyers trust listings from reputable brokerage firms than those from individual business sellers.
The above are not the only benefits you stand to gain. There is a lot more. To rip the full benefits of working with a broker, all you have to do is hire the most reputable and experienced business broker. Don’t hire a broker simply because their rates are low but because they are good at what they do.
One of the duties of a business broker Orange County is to guide you through the due diligence process. Due diligence is an important step in the sale of a business which helps the buyer determine if your business is a good investment. Focus here is to gather as much information as possible in order to make the most informed decision. But what are the steps involved in due diligence?
Execution of the LOI
The first thing that has to be done is the submission of the Letter of Intent by the buyer. This is a document that discusses the particulars of the deal and also involves a down payment of at least 10% of the total selling price. The down payment is fully refundable and the LOI is not binding. The buyer must sign a non-disclosure agreement prior to being shown into the secrets of the business. The LOI will also include the duration of due diligence. This can be between a week and 4 weeks. Your business brokers Orange County will help review and negotiate the terms in the LOI.
Conversation with the business owner
Once the down payment has been put in escrow and the LOI has been executed, the first step in due diligence is a conversation with the seller. This is done to get an overview of the business. The buyer will also want to have a conversation with the landlord to discuss the transfer of leases. Often times, landlords are willing to draw up new leases for the new business owner. If using SBA loans, the SBA may require a ten-year lease option agreement.
Thorough vetting of financials
Once matters on the lease agreements have been settled, the buyer will now do a deep dive into your business. Focus is to go through your financials. The buyer gets access to the profit and loss statements, income statements, bank statements, balance sheets, tax returns, credit card transactions and all other financial information that pertain to your business. The objective here is to see if the financials represented in your marketing materials were accurate.
The last step involves the closing attorney and a business broker Orange County. The two collaborates to develop a closing document for the two parties to review. Closing documents will include the bill of sale, Asset Purchase Agreement, Promissory Note and Uniform Commercial Code filing. This will also include the seller and buyer closing settlement statements.
Selling a business is not as straightforward. This is why you must always involve experienced business brokers Orange County to guide you through the process. Find someone that has experience selling businesses that are similar to yours.