Recent studies indicate that it takes, on average, about eight to ten months, from the time you go to market to sell a business. This figure seems to increase yearly. Why does it take so long to sell a business?
Price and terms are the biggest reasons! It is very important not to overprice the business at the beginning of the sales process. Motivated and educated Buyers are on the side line waiting for new businesses to come out. A business will also sell more quickly if there is a reasonable down payment and a seller carrying-back note. Having all of the necessary information right from the beginning can also greatly reduce the time period. Do not under estimate how long this can take. Finally, being prepared with the information a buyer most likely will want to review or having the answers to commonly asked questions is important so that you don’t lose momentum. In other words, be prepared.
Here are some basic items a prospective buyer will want to review and a seller should have prepared to help facilitate a quicker sale:
Copies of the financials for the past three years.
A copy of the lease and any assignments of the lease from previous sales.
A detailed list of the furniture, fixtures and equipment that will be included in the sale. Note: If something is not included in the sale, it is best to remove it from the premises prior to the sale or at least have a list that specifies which items are not included.
A copy of the franchise agreement, if applicable, or any agreements with suppliers or vendors.
Copies of any other documentation pertaining to the business.
Supporting documents for patents, copyrights, trademarks, etc.
Sales brochures, press releases, advertisements or other sales materials.
In addition, here are some key questions that buyers may likely ask. A prepared seller should have ready answers and information to support those answers.
Is the seller willing to train a new owner at no charge?
Are there any zoning or local restrictions that would impact the business?
Is there any pending litigation?
Are any license issues involved?
Are there any federal or state requirements, or environmental OSHA issues that could affect the business?
What about the employee situation? Are there key employees?
Are there any copyrights, secret recipes, mailing lists, etc?
What about major suppliers or vendors?
A prepared seller is a willing seller, and having the answers to the above items can significantly reduce the time it takes to sell a business.
Using the services of a professional Certified Business Broker can also greatly reduce the time period and assist in preparing the seller and business for sale. Certified Business Brokers are knowledgeable about the current market, they know how to position and market a business to generate the best terms and conditions. Certified Business Brokers also know how to properly price the business given the current market conditions which changes constantly.
