Tips For Sellers
How to Sell a Business
Most business owners are very skilled at starting, operating and growing their business. However, the process of how to sell a business may be unfamiliar ground. ABMI will help take the mystery out of the process and keep you informed along the way.
The outline below describes what to expect.
Define Your Objectives
As a first step, your ABMI consultant/agent/advisor will meet with you to discuss your objectives and build an understanding of your ultimate goals. This meeting can involve discussion about your financial goals, time goals, level of commitment in selling, and an overview of the marketing process.
ABMI has helped thousands of business owners in the marketing of their businesses over the last almost 30 years, throughout the Midwestern USA. If you're a business owner, of any size, any type, any price, and would like to know how to sell your Kansas City business, or your Missouri business, or your Kansas business, or a business in some other part of the country, we can help.
Analysis and Evaluation of the Company
As a business owner, it is not unusual for a significant portion of your net worth to be tied up in your business. As a result, an accurate assessment of the value of the business is essential to insure that you are able to extract the maximum amount of value from your years of hard work and dedication.
ABMI begins by reviewing the business financial statements, and assets, and overlaying industry trends and knowledge of comparable market transactions to help you arrive at a preliminary estimate of value.
ABMI, having brokered the sale of thousands of different small and medium size businesses, of all kinds, all types, all sizes, all prices, over the last almost 30 years, provides business owners with a no cost preliminary evaluation of what price a qualified buyer is likely to pay for the business.
Sometimes, a third-party valuation is recommended to support the ABMI preliminary estimate of value and provide third-party validation of value to potential buyers. ABMI partners with some of the most respected business valuation firms in the country and through our alliance-partner relationships can pass substantial cost savings through to our clients for these third party services.
Professional Marketing Materials
ABMI will develop a comprehensive marketing package for your business. This package will provide potential buyers with a review of your business including the 1) products or services your business provides, 2) primary customer base, 3) historical financial information, and 4) a detailed breakdown of the assets of the business.
The marketing package will be presented to qualified buyers on a strictly confidential basis. Each potential buyer will provide ABMI with a promise of confidentiality agreement prior to receiving any specific information on your business.
In addition to the comprehensive marketing package, ABMI will prepare non-confidential marketing materials, such as ad copy and a General Business Overview. The General Business Overview is a one-page introduction to your business that does not disclose any confidential information. This marketing collateral will be used to market to targeted potential buyers.
Strategic Marketing Plan
ABMI will place non-specific advertising for your business on a large number of strategically placed "business opportunity" Internet sites. The Internet advertising campaign will be specifically tailored to capture the highest level of qualified exposure as possible for your unique business. This customized campaign will be continually tracked through monitoring the number of hits and traffic on your ad. Refinements are made as needed to adjust to shifting traffic patterns.
- Print Media
ABMI will use print advertising as appropriate to market your business. This type of marketing is used in more of a general context to generate buyer traffic. Forms of print advertising include the local newspaper, and professional journals or publications.
- Direct Marketing
Building on almost 30 years in the Kansas City Metropolitan Area market, ABMI has developed a database of thousands of qualified potential buyers. Using our proprietary approach, we tap into our existing relationships with potential buyers with interest in businesses that meet their criteria.
- Key Referral Marketing
In addition to direct marketing to specific buyers, ABMI has relationships with many professional associations that support a high membership of potential buyers.
All of these methods combined with a full time staff of experienced marketing professionals and brokers work together to provide your business with exposure to a wide range of resources.
ABMI believes in a high level of communication with our clients to keep them informed regarding developments with the sale of their business. We will communicate with you regularly regarding the results of the advertising campaign and feedback from potential buyers. Through this ongoing dialog we can collectively discuss additional opportunities or adjustments to market the business more effectively.
Negotiations and Closing
Finally, ABMI will assist the new buyer in preparing an offer to purchase agreement, and present this offer to you. Our seasoned team of professionals will facilitate any negotiation and once a agreement is accepted, coordinate the closing process. ABMI will assist at every step of the closing cycle including coordinate the due diligence process, and handling the paperwork associated with the transaction. Additionally, we will assist the buyer as needed to prepare a loan package to assist them secure financing. ABMI also volunteers to work with the buyer's and seller's accountants, attorneys, tax consultants, and other advisors, to insure that all parties receive the proper amount of advice and counsel.
ABMI has refined the closing process through the development of a closing workflow system helping to insure that all parties are aware of their specific tasks and the date each must be completed to insure a smooth closing process.
Here's a checklist of the items Sellers should provide:
- Three years' profit and loss statements and balance sheets, if available
- Federal Income tax returns for the business
- List of fixtures and equipment
- The lease and lease-related documents
- A list of the loans, if any, against the business, with amounts and payment schedule
- Copies of any equipment leases
- A copy of the franchise agreement, if applicable
- An approximate amount of the inventory on hand, if applicable
- The names and contact information of any outside advisors
Make sure the financial statements of the business are current and as accurate as you can get them. If you're half way through the current year, make sure you have last year's figures, and tax returns, and also year-to-date figures. Pricing a small business usually is based on cash flow. This includes the profit of the business, but also, the owner's salary and benefits, the depreciation, amortization, other discretionary expenditures, and other non-cash items. Your ABMI agent will assist you in professionally identifying the cash flow elements.
Business owners who would like to arrange a no cost, no obligation appointment, to discuss any of these topics, may phone ABMI at 913-341-6300 or register with this web site, and we will contact you.