What
Kind of Offer Can I Expect?
Most businesses sell for between 80%-100% of the asking price,
with a few selling for greater than the asking price. You can get
the highest price in the shortest timeframe by offering Seller
financing for up 80% of the purchase price. Doing so also shows
the buyer you have confidence in the future of your business.
However, over 50% of the businesses Mercury has sold, sold for
100% cash to the seller. This is because Mercury actively assists
the Buyer in preparing and submitting bank applications, business
plans and projections at no cost to the buyer. Not every business
is "Bankable." When you meet with one of our associates,
discuss with them the options you have given the unique nature of
your business.
The offer will more than likely have several
contingencies for such things as verification of accounts and
records, transferability of the lease, and verification and
release of liens. You should expect a training period to assist
the new owner as well as a non-compete agreement for a period of
time. Mercury Business Brokerage will help you understand all
offers and help you remove the contingencies.
What Do
Buyers Look For?
Most buyers look for the following factors:
Provable Books and Records
A buyer’s offer and future cash flows depend on the accuracy and
honesty of your records. Buyers look to prove that your historical
numbers accurately reflect your business.
Reasonable Price and Terms
Ultimately, small- to mid-sized business buyers are looking for
three things from the future cash flows of the business they are
buying: (1) an adequate living wage, given the required skills and
experience of the owner, (2) the ability to make the debt
payments, and (3) a reasonable return on the money they are
investing. Generally, if the selling price supports these three
elements, you’ll have a successful sale.
Leverage
Buyers do not generally want to pay 100% cash. They expect to pay
20% to 30% down and to finance the balance, either from the Seller
or through a bank. Sellers can carry back a portion of the sales
price to show the buyer they have confidence in the business and
generally will receive a higher price and sell their business
quicker than Sellers that ask 100% cash. Mercury actively assists
buyers in securing bank financing for a majority of our deals,
enabling us to reach more buyers for your business and you to cash
out completely, should that be your choice.
Furniture, Fixtures, and Equipment
A buyer expects to get all the assets needed to sustain the
business, in good working order and unencumbered.
Lease, Training, and Non-Compete
The new buyer usually expects to continue the business in its
present location and must be able to assume or sign a new lease
with the landlord. The buyer will expect you to provide training
and consulting for a period of time and to sign a reasonable
non-compete agreement.
Motivation
A buyer seeks to understand the reason an owner is selling as a
way to discover any “landmines” and to be sure that the owner
is not hiding anything.
Time Is of the Essence
A serious buyer wants to move as quickly as possible, so you must
respond to the buyer in a timely fashion. Once an offer has been
accepted, it is key to work with all due haste to remove the
contingencies, provide needed information, and move to complete
the transaction.
No
Surprises!
We can help the buyer deal with almost any situation, as long as
it is disclosed up front. Surprises—not bad news—kill deals.
Surprises raise questions in the buyer’s mind and destroys
trust. Disclosure up front establishes a relationship of trust and
honesty. Don’t hide key facts from your broker or buyer. Some
typical surprises that have killed deals include; financial
statements that are unsupported by actual tax returns, unpaid
taxes, hostile landlords, poor leases, unpaid and undisclosed
loans, zoning changes, loss of key employees, and health and
safety issues. Disclose! Disclose! Disclose!
How Do I Prepare My
Business For Sale?
When preparing your business for sale,
do—
 |
Keep good records |
|
Allow sufficient time for the sale |
|
Accept terms |
|
Disclose, disclose, disclose |
|
Use a knowledgeable business broker |
|
Seek legal and accounting advice |
|
Ensure key employees will continue |
|
Continue to operate and grow your
business |
|
Plan to train the new owner |
|
Plan to sign a non-compete agreement |
| |
|
|
At the same time, don’t— |
|
Underestimate the value of your business |
|
Wait too long |
|
Overprice |
|
Be rigid on terms |
|
Stop growing your business |
|
