Selling a business is very unlike selling something such as a product or real estate, it is a lengthy, at times stressful, and confidential process which can take up a great amount of time and energy. On average it takes 6 to 12 months to sell a business, during which time there are many different steps to the process which a business owner must undertake. It is because of this lengthy process that many business owners are using companies such as bcms.com, who are specialists in helping owners sell their business in the easiest way possible. To better understand how a business is sold, here are the steps which are involved in the process.
Determining Value
In order to get an accurate valuation of a business, a third party should be brought in to do a complete assessment of the business and reference that with the current market to give an asking price. Valuers will charge anywhere from $3,500 to $7,500 for their work.
Reviewing the Business
Many business owners will use this valuation and the comments about the business, to further add value to their company. For example the valuation may bring to light some aspects of the business which could be better such as paperwork, taxes or logistics, so owners will seek to address this in order to boost value.
Seeking Buyers
Once a business owner has invested time and effort into boosting the value of their company they will then need to search for someone that may want to buy it. Much of the time and energy of selling a business will be committed to this end, which can be a very stressful time indeed. Of course not everyone who shows interest will actually make an offer, so there is a great deal of to and fro until a buyer is found. During the process of searching for a buyer, the business of course still needs to be well managed on a day-to-day basis, despite the uncertainty around the sale.
Brokers and Failures
Brokers are often used by owners because they have a wider access to potential buyers, plus their experience can help to boost the asking price of a business. What happens in many cases however is that offers will fall through, which can be very frustrating for business owners. In many cases an offer for a business will be funded using 3rd party loans, unfortunately many will make offers prior to agreeing the loan, and this is why many offers fall through.
Contracts
Once a buyer is eventually found, and that buyer has the financial means to complete the transaction, contracts will need to be drawn up by solicitors. The sale of a business comes with many legal requirements which also requires a lot of documentation, this kind of paperwork is not always readily available. A contract for the sale of a business can be up to 50 pages long, so gathering the correct information and putting it all together can take a lot of time before the two party sign, and money and ownership is transferred.
As you can see, selling a business is far from easy, and it certainly isn’t quick!