Steps to Sell a Business
Steps to Sell a Business
1. Business Owner Initial Meeting
The key of the meeting is to give the business seller a clear understanding of what to expect during the process of selling the business. The initial meeting could take 30 minutes to 1 hour either at business owner’s location, at a mutually agreed central location, or at our office. Introduction to FCBB and explanation of how FCBB can help maximize the value of your business, explain the process of how businesses are sold, and answer any questions the business owner may have. During this meeting, your FCBB Intermediary may ask for a copy of company financial statements, corporate business tax returns, corporate brochures and sales materials, and any other pertinent information to understand your business.
2. Business Value Analysis and Recast Financial Statements
Your FCBB Intermediary recasts your financial statements to reflect adjustments for nonrecurring expenses and nonoperational expenses, calculates the Discretionary Earnings, and prepares a market value analysis. If the decision has been made to obtain a third party business valuation, your FCBB Intermediary will prepare the business outline and coordinate with the third-party business valuation expert.
3. Third-Party Business Valuation
It is important to get a professional opinion on the value of your business. This is due to give you an overview of the market place and understand the value of the business you have built. In addition, professional third-party valuation can be used to help establish the final selling price of the business with interested buyers. Please find more information about business valuation here.
4. Engagement Commitment
FCBB will present and explain the recasting of your financial statements and the business value analysis. Your commitment to us is to sell your business at a price and with terms consistent with the marketplace. Your FCBB Intermediary will prepare the engagement agreement for your execution. The engagement agreement will get the process started to market your business to potential buyers.
5. Business Documentation Preparation
You provide your FCBB Intermediary with all the necessary documents and data required to support the sale of your business. Details are not released to prospective buyers without the execution of a Non-Disclosure Agreement (NDA) to protect the confidentiality of your business. FCBB will prepare an FCBB Business Profile based on the data and financial information you provided.
6. Market the Business to Potential Buyers
FCBB will market your business to the biggest business brokerage network out there. Over 5,000 potential buyers visit FCBB Network Websites daily. We advertise and market your business to get the highest possible response and greatest number of prospects. In addition to the FCBB Corporate website, we advertise on numerous other “business for sale” sites, local, regional and national publications; and access the FCBB Buyer Database. In fact, we will market your business to more Websites than any other firms out there. Your business will get the exposure it needs to find the right buyer(s).
7. Identify and Screen Buyers
Valued Representation of your business means the qualification of potential buyers for your business, therefore eliminating those who are unable or not ready to acquire the company. All prospective buyers must sign a Non-Disclosure Agreement, complete the FCBB Buyer Profile and demonstrate financial capability prior to receiving detailed information on your company.
8. Qualified Buyer Business Presentation
The FCBB Intermediary presents your business to qualified potential buyers and provides, at their discretion, a copy of the FCBB Business Profile. During the presentation and meeting, the various components and benefits of the business are discussed. FCBB Intermediary will work with the buyer to see if your business is the right fit for him/her.
9. Buyer & Seller Meeting
A meeting between yourself, the prospective buyer, and the FCBB Intermediary, is organized to enable the buyer to learn more about your business. This also provides an opportunity for you to learn more about the buyer.
10. Term Sheet and Offer to Purchase
Your FCBB Intermediary encourages the buyer to write a fair and equitable offer to purchase the business, accompanied with an earnest money deposit. FCBB Intermediary will gather all the information about the offer from the buyer(s).
11. Offer Presentation to Business Owner
Presenting the Offer to Purchase includes an explanation of the terms and conditions, background information on the buyer, discussion of the contingencies and an understanding of the reasoning behind the offer.
12. Offer Acceptance or Counter Offer
You may accept the offer as it is written, or with the help and experience of your FCBB Intermediary, create a counter-offer or reject the offer entirely. If necessary, we will facilitate the negotiations of counter proposals.
13. Mutual Acceptance
When all parties agree to the terms and conditions of the sale, sign all counter offers and amendments, the offer becomes a contingent Purchase Agreement.
14. Assist with Financing
FCBB has many financial resources including lenders who specialize in SBA loans or business loans. Your FCBB Intermediary will assist you and the buyer in determining which method of financing will work for all parties and lead to a successful closing. You can access our Website about business financing options.
15. Due Diligence
Nearly all offers are contingent upon the buyer’s inspections and approval of all aspects of the business operation including financial records. The handling of the due diligence process is a crucial step in a successful divestiture as it verifies to the buyer that they are indeed acquiring what they believe has been offered for sale.
16. Contingency Removal
The buyer removes the contingencies from the agreement for the agreement to become a binding offer for purchase and sale. At this time you are now ready to enter escrow (note that some states use closing attorneys).
Your FCBB Intermediary will send the Purchase Agreement and other documents to the escrow or closing attorney who then drafts the escrow documents. Escrow is “open” as soon as both buyer and seller have signed the escrow documents. Depending on the state in which you live, or are acquiring the business, this process may be handled by other parties. Your FCBB Intermediary can inform you in detail what to expect in your market.
18. Lease Assignment
Your FCBB Intermediary presents the buyer’s experience and financial qualifications to the landlord in order to obtain a lease assignment or a new lease satisfactory to the buyer. Note that this is generally one of the buyer’s contingencies on the Purchase Offer.
19. Escrow Note and Lien, Search, Clearance, or Assumption
If there are existing loans, liens, or equipment leases that the buyer is to assume, we can work with the lender, leasing company, closing attorney or escrow company to transfer those obligations. All liens must either be cleared (closed) or transferred to the buyer if part of the contract.
Arrangements are made for you and the buyer to count and price the inventory if it applies to the business that is being sold. If it is a large or complex inventory, it may be necessary to outsource this function to an inventory service.
The signing of the final closing documents may be done at escrow, in person, or, in many cases done via courier, email or fax. The business is transferred, funds are distributed, and FCBB has facilitated another successful business transaction.
22. Post-Closing Training and Hand Over
You will work with the buyer to have a smooth transition. It is common for the seller to stay some time to train the buyer on the business. In addition, it is also common for the seller to give buyer support for certain period of time after the sale of the business. As a seller, it is important that the buyer is happy with his/her investment and be successful. In many cases, the seller is also helping the buyer with financing so it is even more important that the buyer is successful with his/her new business.
Please contact us for a confidential meeting about selling your business.