Selling a business is a process. It is not an event that you work towards, like an auction. To ensure the best outcome you will need to follow the guidelines of the sales process. You will succeed selling any type of business, providing the price, the marketing and the presentation of the business are done professionally.
A typical purchaser, looking for a business to buy, will be looking at more than one business for sale. While they are looking at your business they will have enquired for at least 5 other businesses for sale.
You will be compared on income; how the business is presented; the industry you are in; potential in your respective market etc. A keen buyer has lots of questions. The person that will provide them with the most accurate information, in the most adequate time frame will usually be the business being bought. It is important that a vendor is prepared for the questions that will come up in the process.
Simple questions are:
- Can I see some financials?
- What is the reason for selling?
- How long has it been on the market?
- What is occupancy rate? (accommodation/ motel business)
- Do you have any exclusive supply agreements?
All these questions are easy to answer and should be answered within a couple of days (maximum!).
This is just the early stage of the process. You may get a lot of enquiries and it can be quite time consuming answer them all with the same enthusiasm at all times. There will be tyre kickers; people who have no intention to buy your business but they want to know more out of curiosity, or they may do research for their own business. These are quite easy to identify!
Every potential buyer needs to be followed up with a phone call to find out their enthusiasm, questions they may have and any concerns. Once you have the right buyer you will need to keep them engaged. You will need to know what information to give out and what information they can only access once an offer is in place.
Selling a business is all about the numbers and asking too much for the business will have a significant impact on the length of the process. By being realistic you will get the same outcome in a much shorter time frame.
So, how long does it take to sell a business; Providing the asking price is right you should have an offer within 6 to 8 months from going to market!
If you don’t get enquiries you will have to come down in price, unless you are not in a hurry to sell. Unrealistically priced businesses can be on the market for years and years.
Remember that selling a business is all about the price, the promotion and the way it is presented. You get one shot at it and when you are longer on the market than 12 months, it can have a real impact on the sale price.
Get a professional opinion before you make the commitment. We can help you getting the right process in place.
Written by Rudy Kokx – LINK Northland NZ June 2017
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