Deciding to sell your business is one of the biggest decisions in your professional life. If you are thinking about selling your business, you likely have many questions. As experienced business brokers and business owners in our past professional lives, we understand your desire to know what the steps are and what the process ahead entails.
That is why we focus on presenting and explaining not just a high level overview, but sharing the details of each of our five steps in the business brokerage process. Let’s take out the mystery, so it is less daunting and overwhelming as you think about selling.
The reality is that most business owners will sell a business once in their lifetime. You have spent long hours and invested a lot of time, energy, and resources to build your business. You don’t want to compromise all those years of hard work by working with the wrong business broker. If you missed our previous articles detailing Steps 1 Getting to Know You and 2 Going to Market, we encourage you to read those brief articles first.
Selling Your Business – The 5 Steps We Follow to Achieve Your Goals:
Step 1. Getting to Know You
Step 2. Going to Market
Step 3. Negotiations
Step 4. Due Diligence, Financing, and Legal
Step 5. Closing
This article focuses on Step 3 Negotiations
Keys to the Game
Continuing with a sports analogy, we are going to talk about “Keys to the Game”: aspects of the game that are going to be important. Keys to Step 3 continue to emphasize the importance of confidentiality, professionalism (these are essential throughout the process), and efficiency as we introduced in Step 2 as these keys are factors you should consider when initially evaluating business brokers. Confidentiality is essential to protect your business, your employees, vendors, and customers/clients and should not be taken for granted.
Being ethical may seem difficult to assess but it is critical that you do your homework when selecting a business broker back in Step 1 Getting to Know You; any hint of a business broker not being ethical may arise during the negotiations process.
Our Role, Your Role, and The Work to Be Done
Negotiating can be an intimidating concept for many. It is often mistakenly viewed as a win-lose game. While our role is to broker the deal so that your goals are achieved, we also want to help you identify the best prospective buyer who will best continue your legacy, support your staff, and contribute to the community. Back in Step 1 we discussed and carefully listened to your goals and what is most important to you. It is through negotiations that we are working hard to secure a letter of intent or multiple letters of intent that align with those goals.
Our role during this step is to be with you every step of the way, guiding, counseling, and negotiating on your behalf to reach an agreement on price, terms, and structure of the deal.
Your role is to make yourself available; timely response can be essential to keep interested buyers engaged and committed to moving forward to Steps 4 and 5.
We completely understand you are still running a business, and it is of paramount importance that your business keeps performing well. This is not the time to take your foot off the gas or your eye off the ball.
We have developed an efficient process designed to let you do what you do best while enabling us to be the champion of your goals solely focused on the deliverable from this step in the business brokerage process: securing a letter of intent or purchase agreement.
In a sports analogy, think of us as quarterbacking the process, managing all members of the team (e.g., transaction attorney, CPA, financial advisor, real estate attorney) and communicating with the prospective buyers and their respective teams. Back in Step 2, we completed our vetting process to only present to you the top qualified prospective buyers who will best meet your goals.
Step 3 involves a great deal of coordination and effective communication. That is where you can rely on our knowledge, expertise, and experience to lead the team, engaging and managing across the various professionals for a coordinated effort.
Effective negotiating is a skill and an art. We are moving from the early stage of expressing interest, to now getting into specifics that are required to be included in the letter of intent. While we encourage buyers to put their best offer forward, some prospective buyers will hold back so we are working on your behalf to have specific letters of intent submitted that include price, terms, financing structure, and transition timeframes.
We are your point person to take vetted prospective sellers to the next step of submitting a strong letter of intent to buy your business. When hurdles arise, we are experienced and creative in identifying ways to come to agreements. We have a proven record in overcoming what may seem like deal-breakers so that we move to Step 4 Due Diligence, Financing, and Legal.
Conclusion
The negotiations step is where we really get down to business. Securing a letter of intent or letters of intent is a significant milestone in the business brokerage process. You can count on us to quarterback the process, guiding, counseling, and negotiating on your behalf. We offer our expertise and experience, but in some cases, our client, the business owner, is very adept at negotiating so we do not have to lead but offer to do so in the circumstances where that is more comfortable for the seller.
The end game of Step 3 is securing at least one strong letter of intent from a vetted buyer who has been qualified to be a strong candidate to buy your business and achieve your goals.
All our business brokers have owned a business and gone through this process. We are confident our hands-on experience enables us to best serve you with support, understanding, and experience. With a final sports analogy, think of us as your biggest cheerleader and the quarterback of the process, leading the team, calling the plays, while communicating with you to protect your interests and your time, and achieve the goals that you shared with us in our first meeting during Step 1.
If you are thinking about selling your business, we welcome the opportunity to meet to learn about your goals, your business, and how we may be the right fit to help when you are ready to start this 5 Step journey.
Our next article will detail all that is part of Step 4 Due Diligence, Financing, and Legal.