The Business Sale Process Explained by a Business Broker
As a business owner, you may be just like many others who operate small and medium businesses — you will sell just one business during your lifetime, and because that is your first and only sale, you may not know what to expect from the sale process.
Selling your business is complex. Using a business broker to sell your business can help you avoid many potential pitfalls.
A business broker is a professional intermediary between you and a buyer. They handle most of the steps necessary to sell your business. However, to sell your business, you must be intimately involved.
Selling your business is a significant decision that you get the last word on, so understanding the business sale process can help prepare you for those decision points.
An Overview of the Business Sale Process
The business sale process has five stages that encompass several steps. The five stages are:
Retaining a business broker
Valuing and profiling your business
Marketing your business and finding buyers
Negotiating and conducting due diligence
Closing
The process starts with you deciding whether you want to sell your business. Consider researching several business brokers to interview before you know if you’re ready to sell. Selling your business can take 6 to 12 months. You have to feel comfortable about the broker you choose to work with.
The Process to Sell Your Business
You might choose not to work with a business broker. However, if you do work with one, here is what you can expect from the process.
Retain a Broker
Meet with your business broker to discuss every aspect of your business, ask questions, determine whether selling your business is what you want to do, and get on the same page.
Beyond a candid discussion about your business, this stage includes an analysis of your business, industry, and competitors and provides a detailed valuation of your business. If you agree, you can sign a marketing agreement to move forward.
Value and Profile Your Business
To attract buyers, a blind business profile is developed. This one- to two-page document provides enough information to market your business to potential buyers without disclosing your identity. A more substantial overview of your business is also developed to provide to qualified potential buyers.
Market Your Business and Find Buyers
In this stage, a business broker begins marketing your business to bring in qualified buyers. The goal is to sell your business quickly at terms that meet your goals. Potential buyers are screened, financial statements are verified, and buyers are interviewed to determine who might be a good fit to run your business successfully.
Negotiate and Conduct Due Diligence
Your business broker receives offers and negotiates to create a win-win. You are presented with an asset purchase agreement instead of a letter of intent. This helps you fully understand the terms, conditions, and contingencies. Your broker manages the due diligence process with the buyer’s attorneys, accountants, and financial and business advisors.
Closing
This is the final stage of selling your business. The business broker will manage every detail of the closing for you, keeping attorneys and accountants on both sides in sync. Both parties sign all documents, and the buyer transfers money to you.
Your business broker will keep you informed at every step of every stage, and you approve all marketing materials, documents, and agreements throughout the process.
Have Confidence in Selling Your Business
Knowing what to expect from the business sale process can give you confidence and result in the best outcome when you decide to sell your business.