In order to successfully sell a business, it is very important to understand the entire scope of the business as completely as possible. The history of the business, the industry it serves, what it provides in the form of a product or service, the long-term relevance of this product or service, current customer base, potential new customers, vertical market potential, and the worth or range of value for all components of the business. The focus then shifts after discovering a range of value. The focus becomes a task of identifying the potential buyer or determining whom the business appeals to as a potential buyer. A buyer will always have certain criteria and attributes that they are looking for in a business purchase. So, where to find these buyers? It is important to know what is happening at any given time that may affect how to advertise the business or reach these buyers. Our job is to confidentially consult with you and help coordinate your exit strategy by implementing the appropriate steps to bring your business to market in a very well prepared manner. Our Chicago business broker team will provide exposure for your company in the right places, convey general information to the right contacts, and position your company where we know buyers go to seek new opportunities in the business acquisition arena.
When we begin the process of working with a new business seller, we start by gathering information in order to produce an “Estimate of Value” for their business. The Estimate of Value is an important part of our overall “Confidential Business Profile” that contains all of the business information. This Confidential Business Profile is produced for every business that we represent in all industries including manufacturing, distribution, medical related, retail, food service etc…This profile will detail the value of the business by conveying an analysis of all of the business assets as well as the cash flow. In every case, with every profile, our philosophy will always be to commit to providing quality analysis and service to all of the clients that we happily represent. Then, we will deliver on that commitment by working together in concert with you the seller, to not only determine a range of value, but also to be able to justify and defend that value to a buyer.
As an example:
You have a restaurant for sale in Chicago, Illinois. ABA helps you sell your business by presenting your genuine business opportunity to qualified individuals or groups who want to buy a restaurant in Chicago. Ideally, ABA will have the opportunity to sell your restaurant at the height of its success and when it is most attractive to an interested party in search of this specific type of business. Our associates will qualify all potential buyers, have them sign a Confidentiality Agreement, and also have them provide some basic financial information. Only after they have gone through our qualifying process are they then able to review the Confidential Business Profile on your business. Preparing that profile and then presenting your business opportunity is what we do best and we are here to be our best for you.
The Key to Selling a Business
Having the foresight to sell your business at the right time and in the best of times.
Selling a business at a time when you want to sell and not when you have to is not only preferred, but very shrewd planning for your long-term financial health. If you sell in good times, in profitable times, in good health…then you sell at a time when you can get the highest sale price and you are also able to enjoy your life the most. In addition, the “best of times” makes negotiating a lot more simplistic for a business seller. During the negotiating process, it is best to maintain some objectivity in presenting your perspective as a seller, but also in appreciating the opposing perspective of the potential buyer.
From your perspective as a seller:
The majority of sellers that we work with want to establish the highest value for their business. They also want to be recognized for their years of building and managing the business. Finally, they want to find a qualified buyer who is able to meet the seller terms. Some things have to be accomplished prior to finding a qualified buyer and we help walk you through the process of these simple steps.
In order to prepare your company for sale, it is critical to understand the need to accomplish these three things:
1. To independently determine the potential Market Value or range of value for the business assets,
but also the real property.
2. To be able to effectively justify how you determined that value.
3. To be able to effectively defend that value.
The true Market Value is ultimately whatever the market will bring, but it is certainly predictable to a degree from current as well as historical business sales in any given industry. Only potential buyers can bring offers that will establish the conditions at that time, but they will typically fall within the range of value suggested by our analysis. It is difficult for the business seller (owner) to set a business value and also defend that value, unless they have a very reputable way of calculating it. An independent party that is not the seller or buyer has to be the buffer and professionally analyze the specific dynamics of your company, as it is uniquely different than any other. Then, they are able to justify and defend what they find. This is what we do at ABA every day and we are happy to help you in determining a value for your business. Determining this value is the most critical step in establishing what the market may bring.
From the perspective as a buyer:
Through our experience with buyers, we have found that most are focused on being able to justify the sale price. The issue comes down to market value as it relates to the sale price. Buyers are analyzing the business cash flow and their return on investment in order to justify the purchase price. Therefore, potential buyers are seeking to buy a business that has done their homework. Buyers are seeking businesses that have already had a 3rd party business analysis performed in order to clearly illustrate the value of the business. The buyer is often required to inject hundreds of thousands of dollars or even millions and needs to know why this business purchase makes sense. Performing business analysis and then presenting genuine business opportunities is what our Chicago business broker team does every day on behalf of our sellers clients.
Our perspective as a company:
Here at ABA, we will help you gather the appropriate information in order to generate a comprehensive profile on your business as stated above. We will provide a list of any additional information that we will need to see in order to complete our analysis for you. At our meeting we will also discuss all aspects of our service, answer all questions, and exchange necessary information in order to begin the process. After having met with you, developed an understanding of your business, and an understanding of your needs, we can then set all wheels in motion.
As we begin the process we will:
1. Gather information and produce an Estimate of Value within our Confidential Business Profile.
2. Tailor a confidential advertising strategy for your specific company in order to target new potential buyers.
3. Confidentially present your specific business opportunity to our buyer database as well as our network of allied professionals.
4. Provide varied confidential multimedia exposure.
5. Provide consistent communication with you, the seller.
6. Provide detailed information to buyers only when they have been qualified and have signed off on a confidentiality agreement.
Again, once we reach a point that an interested party has displayed a real ability to buy a business, has been qualified to move forward, we will then provide the buyer with the Confidential Business Profile and begin scheduling meetings with the seller. ABA will also proactively negotiate any Letters of Intent or Offers to Purchase that are presented by a buyer. ABA assists in all aspects from this point forward in conjunction with referring any needed professional legal counsel, accountants, bankers etc… We work closely to ensure a smooth and respectful transition for all parties involved. We know how much the business means to the seller and also how excited the buyer is to begin operating their new business.
Planning and Financial Tools:
There are a number of planning and financial tools available to help you with the process of buying a business or selling a business