Some Interesting Numbers
Of businesses currently on the market nationally…
…less than 25% with revenue under $10 million will sell.[1]
Of business buyer prospects that inquire on opportunities…
…less than 3% will actually purchase a business.[2]
Of high net worth individuals that purchase a business…
…90% purchase a business that they did not initially inquire.[3]
Of business owners surveyed…
…65% don’t know the value of their company,
…and 85% don’t have an exit plan.[4]
60% of sellers said they received an increased price of over 40% by using an intermediary and…
…10% said they received 90% more money for their business.
…20% said they received 60% more money for their business.
…30% said they received 40% more money for their business.[5]
90% of sellers using an intermediary felt that their involvement…
…resulted in a more confidential sales process.[5]
90% of sellers using an intermediary felt that their involvement …
…resulted in significantly reduced stress.[5]
According to a recent study…
…failure to do pre-sale planning is the #1 reason why deals fail.[6]
[1] The Business Reference Guide, The Essential Guide to Pricing a Business, 15th Edition by Tom West
[2] International Business Brokers Association
[3] Buying a Business to Secure Your Financial Freedom by Ed Pendarvis
[4] M&A Today
[5] Results of a survey conducted by Smith Bucklin and Associates; commissioned by the M&A Source & the IBBA
[6] PriceWaterhouseCoopers, Whose Business Is It Anyway? Smart Strategies for Ownership Succession
13 Questions to Ask Before Trying to Sell Your Business Yourself
Before deciding to sell your business on your own, it is worth asking yourself the following questions:
- Do I have a way of confidentially marketing my business without my current employees, customers, or suppliers knowing that I am considering the sale of my business?
- While trying to run my business, do I have the time to weed out the 97% of buyer prospects that don't buy a business?
- If I take time away from running my business to handle the business sale process, will my business potentially decline in sales or profitability which would make my business even more difficult to sale?
- Do I know how much my business is truly worth in today's economy?
- How do I know that I am not asking too much when selling my business and scare away buyer prospects prolonging the time frame to sell but don't price the business too low and leave money on the table?
- Do I have a way to market my business to the largest audience of potential buyers?
- Do I have a mechanism to make sure that my confidential information doesn't get into the wrong hands?
- If I know of a company or individual that would potentially acquire my company such as a competitor, supplier or customer, do I have a way of contacting them to see if they would consider an acquisition without first letting them know that it is my company that is available for sale?
- Do I know how to properly "package" my business to excite and answer key questions of a potential buyer and do I have time to assemble such a prospectus?
- Do I have experience in successfully negotiating a small business transaction?
- Do I know how to creatively structure deals that work for both the buyer and seller, especially in a tough lending environment?
- Do I have a network of business advisors that are specifically skilled in assisting in the completion of small company transactions such as transactional attorneys and business acquisition lenders?
- Do I have a way to provide a buffer between me and the buyer prospect to address my concerns during negotiations and due diligence without jeopardizing the chemistry that I have developed with the buyer prospect?
These questions are designed to help you realize that a business sale is a complex endeavor. When you sell your business, don't look at professional representation by a business broker as a cost. It should be viewed as an investment to maximize your business value or insurance to prevent the loss of value.
Other Topics in Regards to Selling A Business
Sell a Business and Maximize Value – Why do business owners sell their business and what can be done to maximize value? Learn more here.
How to Sell a Business – Learning how to sell a business while maintaining confidentiality is one of the most important aspects of selling a business. Learn more about how business brokers sell confidentially.
Business Selling Myths – Selling a Business is a complex process. Many sellers are misguided about the process. Learn more about the myths of selling a business.
Thinking of Selling Your Business? – Tips for every business owner selling their business. Learn about the emotional roller coaster, time needed for transitioning the business, why you should start the process now, and things you can do to start planning for your eventual exit.
Sell Your Company Knowing the Facts – More tips on selling a business such as explaining growth opportunities and the real value of your assets.
Business Seller Mistakes – Why do most business transactions fall apart? Time can be the enemy. Learn more about the number one reason why businesses fail to sell.
Business Brokers Increase Your Chances of a Successful Sale - Professional business brokers have the experience needed to manage the business sale process. Coordination between buyer, seller, and the other parties is needed to prevent a deal from falling apart at the last minute. Learn more about the importance of a business broker in a business for sale transaction.
Business Brokerage Firms are Not Equal – Selecting the right business brokerage firm to represent your company is very important. There is much more to the equation beyond price. Learn more about what qualities are important.
Confidentiality Agreements – Confidentiality agreements are part of the buying a business process. A confidential sales process is important to a business owner. Learn more about why business owners require confidentiality.
Valuing a Business – Understand the methods of valuing a business is important for both the buyer and seller to have a fair negotiation. Learn more about the methods of business valuation.
Reasons for a Business Valuation – Pricing a business for a third-party sale is not the only reason to have a business valuation completed. Learn more about the other situations that may require a business valuation.
Structuring a Transaction – A common question is whether or not a deal should be structured as an asset purchase or a stock purchase. Learn more about the pros and cons of each when selling a business.