Selling your Business and the power of Competition—THE SELLING CRITERIA.


Posted by: Fernando Simo in Selling Your Business on Jul 26, 2009

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More than ever before, the selling of your business has become extremely competitive.  As a seller, in this market, you are competing with a greater volume of similiar businesses for sale, buyer's investment choices in this very tight and limited financing environment and, most importantly, the brokers' time and involvement in your listing.

Here, I would like to focus on the latter--the brokers' time and involvement in your listing.  By the way, by "broker" I do not mean the person who got your listing.  I really mean the thousand of other brokers in the market, whose purpose is to find a buyer for your listing and, as such, generate a commission.  They and your broker SELL YOUR BUSINESS!!  Now folks, they are human.  So, they look for listings that meet a "Selling Criteria"--in other words, the listings that have a greater probability to sell.  Now, what do I mean by "Selling Criteria?"  Let me give you a few elements that will help you meet it:

a.    Commission.  Many sellers like to pay less commission than standard on their listing.  Guess what?  Some brokers look at higher commission levels.  Money speaks so they move to higher commission listings.

b.    Financials.  In our business, we can disclose a business' Profit and Loss in more than one way.  Although there are several ways in which to do it, let me focus on three:

        1.    Owner to Prove.  This means that an owners' financial figures shown on the listing will be "proven" by the owner.  Brokers and buyers normally spend very little time on this type of listing.

        2.   Profit and Loss Statements.  This means that the numbers shown on the listing are backed by prepared financial statements--Quickbooks, Accountants, CPA's.  Obviously, a preference would be audited financial statements, which, by the way, are seldom provided.

        3.  Tax Returns.  Buyers and brokers both like Tax Returns.  Why?  They are normally and understated indicator of the financial results of the business--as I mentioned in a previous blog, the understatement occurs through cheating.

c.    Proper Documentation.  Lease agreements, Franchise Agreements, etc.  This information provides the broker with greater insight on your ability to sell the business and helps buyers make a quicker decision when buying it.

d.    Equipment List.  The list represents incremental value, therefore more appealing to buyers.

 So, if you want your business to sell, BE COMPETITIVE!!!  Ensure that you meet the very minimum level of the "Selling Criteria," as defined above, and provide your broker with the tools to be competitive and successful in selling your business.

 

Should you want to know more about buying or selling a business, please contact Fernando Simo at 407-361-8886, or email at fsimo@tworld.com, or please visit my website at www.bizbuyorsellflorida.com.