Questions that Business Sellers Should Ask Themselves
Now that you’ve decided to sell your business, think about the type of buyer you want, what type of sale (partial or whole), and whether you would like to stay on or leave. For smaller businesses, some of these answers are dictated by the SBA, since they guarantee most of the bank’s loan to your buyer and dictate certain rules.
For larger businesses, you will have a plethora of choices. If there are competitors in the area that may want to buy your business, it’s possible to consider a merger or outright sale. If you’ve spent years building the business and want it placed in good hands, it’s possible to find a buyer who will care for your business and your employees, as you did over the years. This way, the business can continue to thrive.
If you simply want to retire with as much money as possible, finding a buyer who is willing to pay more may be important. Since most buyers are unwilling to simply drop a bag of cash at your feet and let you walk away, the terms will be very important, as well. Once you have an idea of what you’re looking for in a buyer, we can help you find the perfect buyer (or even multiple buyers) and get a fair price and great terms for your business.
Finding A Fair Value For Your Business
Before the business is presented to buyers, a business valuation needs to be done and done well. This is a way of determining the correct price, so you have a good chance of getting a fair amount for the business, and so you’re able to attract more buyers. Our expert Dallas business brokers can handle the business valuation for you, so you know it’s done right.
We have years of experience working with businesses just like yours, so we know how to do a business valuation and how to determine the correct asking price for any business. Be careful! This is where many Dallas business brokers go astray. They give the business owner a fanciful valuation, as a way to get their business, knowing full well this value will never come to fruition. We literally have some of the best credentials and expertise in the country. We’ll also show you exactly how we arrived at that price and provide backup evidence. You’ll be in good hands at VBBA
Factors Affecting the Asking Price of a Business
One of the most important aspects of selling any business is setting the asking price. In smaller deals, it’s usually expected that the business broker and Seller will set an asking price. In larger, lower-middle-market, or middle-market deals, the buyers will determine their own asking price. However, even in the larger deals, the buyers will always want some idea of whether the Seller’s expectations are reasonable. Some sellers are too quick to set a high price without considering all the ramifications of that decision, but other sellers are prone to set the price too low. Neither of those situations is advantageous to the seller.
A business broker will use different valuation techniques when evaluating a business to arrive at an accurate price. They compare the seller’s business to other similar businesses that are currently for sale or have recently sold. They also use the income of a business as a guide when building discounted cash flow or capitalization of earnings methodologies. Finally, for distressed businesses, they may look at the liquidation values or replacement costs of the existing buildings, equipment, and other property.
At that point, the business broker will review the figures with the Seller and explain how and where they obtained the figures. Understanding all the approaches to valuation makes it easier for a seller to establish a fair asking price. The majority of business brokers will encourage sellers to be realistic and set a price that’s not too high or low for the existing market conditions. Another aspect to consider when establishing an asking price is predicting where the market will go in the near future. For example, a business that’s in a growth industry can command a higher price than one in a declining sector. Also, the stage of the business cycle may be an important factor, as well, depending on how fast the Seller may wish to sell the business.
Working Through the Process of a Business Sale
After creating the marketing materials and developing the buyer list, hopefully, we find multiple buyers. Then, it’s time to put the deal together and sell the business. Typically, the buyer will make an offer in the form of a Letter of Intent (LOI), which outlines some of the most fundamental prices, conditions, and terms of the deal. You’ll have time to review this with us and your M&A attorney.
Don’t have a mergers and acquisitions attorney? That’s no problem, we have a close-knit circle of them. While many M&A attorneys are simply out to cause arguments and run up the billable hours, possibly killing your deal, the attorneys we work with will get your deal done (and usually, for less than your current business attorney). Then, if you like the offer, we’ll work with banking, legal, and accounting so that the closing can occur. Once the check has cleared, we will celebrate, along with the new owners of your business.
There are many types of sales for businesses including an outright sale, a merger, recapitalization, or an acquisition, and each can have benefits or disadvantages. We make sure to choose the right type of sale based on your preferences, as well as what the buyer needs or prefers. This way, it will be more likely you’ll find the right buyer, and the sale can close quickly. No matter which methodology you choose to sell the business, we will work with you through the sales process and make sure you get a fair value and great terms for your business.
What Questions do Potential Business Buyers Ask?
Buyers are like anyone else, they come in many different flavors and styles with a range of experience from zero (none) to former CEOs and executives looking to leave the corporate world. The questions most will ask are easy and you can tell the more experienced vs the less. A good broker will have already answered these questions, so hopefully, you can watch and enjoy the process. Some FAQs are listed below and each one we will answer for our clients to better prepare you for your buyer/seller meetings.
- What do you think the potential to grow is?
- What would you do differently if you had to do it over again?
- What will your customers think about the sale of your business?
- What about this deal is negotiable?
- Can I get a list of all the contacts you have?
- Could this business be moved to another location?
- What will employees think about the sale?
- Will any customers leave because you are selling?
- Who is your best customer?
- What is the biggest problem that keeps you up at night?
Working With Valhalla Business Brokers & Advisors
You have a choice of Dallas business brokers to work with, so you’ll likely want to work with the best. After all, you want to make sure your sale is done right and that you get what you need from the sale of your business. That’s our offer to you. We have years of experience brokering business sales in DFW & North Texas, as well as connections with buyers who may be already looking for a business like yours. We have an excellent record of being able to close our deals, as well as the ability to sell businesses for outstanding prices, while still getting outstanding terms, all while finding the right buyer for your business. When you contact us, you will see how we are different from the other Dallas business brokerages.
If you’re ready to sell, you’ll want to work with a business broker who knows the area. Our team lives and works in Dallas, so we know Dallas, Fort Worth and all of North Texas well. We also know the business market in Dallas. We understand the market, so we know what sellers are looking for and what buyers might want. We have the experience needed to close deals and to make sure the sale is done right, so you have nothing to worry about once your business is sold.
Are you thinking about selling your business? Whether you’re looking to retire, or you want to try something new, our team can help. Valhalla Business Brokers has an excellent track record when it comes to business sales, and we’re ready to sell your business as well. We can even help you find a new one to purchase. Contact us today to learn more about what we can do for you.
If you want the best possible help selling your business or need a business valuation, call us at (469) 530-4920 or email us at [email protected] to start a confidential conversation with us. We will get back to you as quickly as possible!