Selling a Business

By making the process of buying or selling a business in Florida as seamless as possible, we as business brokers perform a very valuable service not only to our clients but in our commercial economy as a whole.

Often considered to be the most important function we perform as business brokers is that of helping the business seller maintain the viability of the business during the listing and sale process. The continued success of the business during the selling process is absolutely critical because if, due to the sale of the business the business slows and revenues are negatively affected, it only serves to make the sale of the business more difficult.

In fact, most business owners do not want their customer base to know that the business is for sale, particularly if the business is one involving a high degree of customer service and interaction. The necessity of secrecy for these owners is due the tendency of a customer base to start searching for a replacement business in case the sale of said business does not turn out well and the new owners do not provide the same high level of service and personal attention to which they have become accustom.

However, there are business owners that do not care if it's known - and in fact want it known - that their business is for sale. But, in our experience, that is the exception rather than the rule.

Of equal concern to the business owner during the selling process is the extent to which the employees will be made aware of the attempted or pending sale. If the pending sale of a business was at first hidden from the employees, and then discovered or revealed accidentally or at a later date, it could be disastrous. For it is only human nature that the employees would be concerned about the type and style of relationship they’ll have with new owners. And, possibly, they would start looking for employment elsewhere as soon the sale was discovered, this would then depress revenues, create tension and make the business less attractive to potential buyers.

Another major concern when selling a business in Florida is that the business owner may not desire the competition to be made aware of the sale. After all, it is not beyond the scope to think that your competition would use the sale of your business against you in such a way that attempts to lure customers from you to them. In fact, this is standard business practice world-wide. So, if the fact that a business is for sale needs to be concealed, then it must be concealed, no excuses.

This begs the question, then: How can you sell a business without letting anyone know it’s for sale? How can such a seemingly impossible task be achieved?

First, it may involve meeting with the owner before the business opens or after it closes, thus, hiding from the employees the fact that a potential sale is imminent.

Second, the business is usually advertised generically by type and category rather than by name or specific location. And, if requested, no photos or video will be used.

Third, when a potential buyer or buyer’s representative contacts the business broker the broker will require the agent to execute a binding confidentiality agreement, an (NDA). This Non-Disclosure Agreement states that the parties receiving confidential information regarding the business will not disclose any information they receive from the listing broker, or from the buyer, or from other seller’s representatives - such as accountants and attorneys - to anyone for any reason for a period of three (3) years.

Additionally, we as the business broker will not only prequalify the potential buyer as to their financial ability to purchase the business but we will also qualify them with regards to the amount of relevant business experience and/or education they possess. Once the buyer has been vetted and the NDA has been signed, then, and only then, will a competent business broker begin to release specific information about the business to a prospect.

This is especially true when owner financing is involved due to the fact that If you sell the business outright it usually doesn’t matter what the business becomes in the future because you as the seller have your money and you’re off. But, if you are holding the paper for the buyer, the future of your business becomes extremely important.

Imagine what would happen if the new owner runs the business into the ground and you have to then take it back because the obligations are not being met? You may have a serious problem on your hands trying to get that business up and running again – or even finding another buyer willing to take it on in its current state. This is why we take the utmost care during the prospect vetting process, to ensure the buyer not only has the money to buy the business but that the buyer also has what it takes to keep the business successful.

An equally important part of the business brokers’ job is to give the prospective business seller an unbiased opinion of the value of the business. Experienced brokers will choose from many valuation techniques that will yield a fair opinion of value. There are many sources available for use in this process, including personal knowledge, experience, published resources and generally accepted multiples for a given type business. An example of accepted multipliers would be multiples of owners benefit (discretionary income), gross profit, net profit and gross sales.

Such to say, ‘a given type business might be considered worth twice the owners benefit, plus FF&E (furniture, fixtures & equipment) and inventory.’

Also part of the process for the business broker is assisting the potential buyer and or his agent, accountant, attorneys etc. with their due diligence in investigating the business they are trying to buy. Then, when an offer is made, then the business broker helps the seller evaluate the offer and conveys counters etc. between the parties.
 
Often in the business sales process the interest may come from a foreign national who may be trying to use the purchase of a business as a vehicle to obtain an improved immigration status. If this is the case then the business broker will often be involved helping the foreign national locate legal counsel that can help with, and possibly expedite, the process of securing the necessary visas.