When the owner of a convenience store, bakery, restaurant, janitorial service company or other small Georgia business is ready to retire, it usually is a good idea to hire a business broker to sell business assets. Thats because the sale will be part of a package that includes goodwill also called going business value, according to Peter Siegel, MBA, the Founder & Senior Advisor at BizBen.com, a major website for the sale of California businesses.
Sure, the seller MAY be able to find a buyer and sell without professional help, but because there are so many challenging problems associated with business transfers, it usually is smart to engage a business sales intermediary to launch the campaign and then manage a transaction, Siegel advises.
Even though a hefty fee has to be paid for that service, it’s almost always better to have the intermediary do the work.
The fee can total more than ten percent of the selling price. That seems very costly for many sellers. And they often fear they’ll lose control of a deal if a third party is involved. But for at least seven reasons, most sellers should not trust themselves to handle the sale. Instead, they’re smart to sign a listing with a competent business sales expert. Those seven benefits are:
1. Larger Market of Potential Buyers: Because professional business brokers are in touch with many motivated buyers who are financially qualified, brokers will have a bigger market of potential purchasers to draw from than will most business owners.
2. Handling Unqualified Buyers: Not having to deal with people who are curious about the business, but may not be financially able to buy it, or qualified to run it. Business brokers specialize in making sure the people introduced to your company have some interest and the financial ability to follow up with that interest.
3. Confidentiality. When a seller hires a broker to sell business assets, the professional will know how to keep the intended sale a secret. It usually is important that employees and customers of a business don’t know that it is for sale. The DIY (do it yourself) seller may struggle to maintain confidentiality when responding to buyer inquiries and scheduling showings.
4. Emotional Detachment. The business sales intermediary, as a third party, is usually in a better position to negotiate a deal between a seller and the buyer, than is one of the principals in the deal. Most business owners have an emotional attachment to their business and selling the business can often be a traumatic experience. The business broker can bring an objective perspective to the process and help the seller see the business from the viewpoint of a buyer, resulting in a more realistic understanding of the financial and economic factors being considered by the buyer. Furthermore, it is critical that the business owner not “slack off;” the business must continue to thrive until the sale transaction is complete – because nothing is final until the final closing of escrow. Therefore, the seller should spend as little time as possible on selling the business and as much as possible on running the business to maximize the selling price.
5. Problem-Solving Experience. Professional business brokers know how to overcome problems in selling a Georgia business. The seller, having little experience in deal making, will be less prepared and equipped to recognize and solve deal-killing problems than someone who has been doing this for a while, and earning a living at it.
6. Access to Financing. Finding small business purchase financing has become more difficult in the past few years following the mortgage meltdown and the banking crisis. Unless a business owner knows lenders who cater to that market, such as financial institutions offering SBA loan programs, it’s likely to be very difficult to know how to help a buyer who wants to borrow some of the cash for a down payment and/or working capital. GABB includes lenders who specialize in business acquisition loans and are often able to save a transactions that won’t work unless the buyer can arrange for funding assistance.
7. Higher Selling Price. A good business broker can present the business in an appealing way in order to get a buyer to pay the price desired by the seller. Or at least, close to that price. Not knowing how to manage competitive bidding to increase offering prices, the seller won’t be able to accomplish that objective. Owners who’ve hired agents to sell business offerings often get a higher price than if they’d negotiated for themselves. The difference often is enough to cover the sales commission.
Business owners sometimes think they should take on the campaign of selling their businesses as a do-it-yourself project. But because they usually don’t have the skill, objectivity or experience of a capable business sales intermediary, they usually improve the chances of successfully closing a deal at a desirable price when they hire a professional to manage the process.
About This Contributor: Peter Siegel, MBA is the Founder & Senior Advisor (ProBuy & ProSell Programs) at BizBen.com (established 1994, 8000+ CA businesses for sale, 500 new & refreshed postings/posts daily) works with business buyers, owners/sellers, brokers, agents, investors, & advisors). Reach him direct at 866-270-6278 or 888-212-4747 to discuss strategies regarding buying, selling, (or financing a puchase of) California businesses.Read More
Did you know that 74% of consumers cite “word-of-mouth” as a key influence in their decision making? But most businesses leave so much good news on the table!
Marjorie Young, an experienced public relations consultant and founder of Carriage Trade Public Relations® Inc., will shared her ideas about creating positive word-of-mouth on Jan. 22, 2019 to the Georgia Association of Business Brokers. The GABB meeting was sponsored by GABB affiliate and attorney Shannan Collier Stalvey, Esq.
Download a copy of her powerpoint presentation here, including a checklist for creating a year-long Public Relations plan for your business.
Young discussed how small businesses can build a positive reputation simply by leveraging the great content that already exists in your business and in your marketing. Young founded Carriage Trade Public Relations® Inc. in 1995. Her firm creates positive word-of-mouth for businesses in the community and online by using reputation management strategies. She also does Crisis PR consulting and audits.
In 2017 the Savannah Chamber named Young Small Business Advocate of the Year. She currently sits on the Savannah Rotary, and Hospice Savannah board of directors. She is an avid hiker and walked Spain’s 500-mile Camino de Santiago in 2016.
The GABB is an organization of professionals who work with owners of Georgia businesses in important and complicated transactions: the sale of their businesses. GABB members help owners determine the asking price of their business, create marketing plans and strategies for selling their business, identify and qualify buyers, and have the knowledge, experience and skills needed to help maintain the confidential nature of the process. GABB members relentlessly pursue professional development so they can provide superior, ethical services for all customers and clients.
For more information on GABB, contact Diane Loupe at 404-374-3990 or firstname.lastname@example.org or Dean Burnette at email@example.com or 912-247-3209.Read More
In the proverbial “perfect world,” business owners would plan three to five years ahead to sell their companies. But, as one industry expert has suggested, business owners very seldom plan to sell; rather, selling is “event driven.” Partner disputes, divorce, burn-out, health, and new competition are examples of events that can force the sale of a business.
Sellers often find, after they have decided to sell, that the unexpected happens and they are “blindsided” and caught off-guard. Here are a few of the unexpected events that can occur.
The Substantial Time Commitment
Sellers find that the time necessary to comply with the requests of not only the intermediary, but also the potential buyers can take valuable time away from the actual running of the business. The information necessary to compile the offering memorandum takes time to collect. Many sellers are unaware of the amount of their time necessary to gather all the documents and information required for the offering memorandum, nor of its importance to the selling process.
There is also the time necessary to meet and visit with prospective buyers. An intermediary will play an important role in screening prospects and separating the “prospects from the suspects.”
Handling the Confidentiality Issue
Owners of many companies are also the founders and creators of them. They can have difficulty in delegating and tend to want to make all of the decisions themselves. When it comes time to sell, they want to be involved in everything, thus, again, taking time away from running the business. Members of the management team, like the sales manager, have a lot of the information necessary not only for the memorandum, but also on competitive issues, possible acquirers, etc. The owner has to allow his or her managers to be part of the selling process. This is easier said than done.
Forgetting the Others
Many mid-sized, privately held companies also have minority stockholders or family members who have an interest in the business. The managing owner may be the majority stockholder; but in today’s business world, minority stockholders have strong rights. The owner has to deal with these people, first in getting an agreement to sell, then convincing them about the price and terms. A “fairness opinion” can help resolve some of the pricing issues. Minority stockholders and family interests have to be dealt with and not overlooked or pushed to the end of the deal. When this happens, many times it is the end of the deal, literally speaking.
The Price is the Price is the Price
All sellers have a price in mind when it comes time to sell their companies. Most businesses go to market with a fairly aggressive price structure. When an offer(s) is presented, it is generally, sometimes significantly, lower than the seller anticipated. They are never prepared for this event – they are blindsided, and obviously not very happy. They turn the deal down without even looking past the price. Here is where an intermediary comes in, by helping structure the deal so it can work for both sides.
Not Having Their Own Way
Business owners are used to calling the shots. When an offer is presented, they, in some cases, think that they can call all of the shots. They have to understand that selling their company is a “give and take.” They can stand firm on the issues most important to them, but they have to give on others. Also, some owners want their attorneys to make all of the decisions, both legal and business. Unfortunately, some attorneys usurp this decision. Owners must make the business decisions.
There is always the small possibility that the word will leak out that the business is for sale. It may just be a rumor that gets started or it may be worse – the confidentiality is exposed. Sellers must have a contingency plan in case this happens. A simple explanation that growth capital is being considered or expansion is being explored may quell the rumor.
“Keeping Your Eye on the Ball”
With all that is involved in marketing a business for sale, the owner must still run the business – now, more than ever. Buyers will be kept up-to-date on the progress of the business, despite the fact that it is for sale.
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The Georgia Association of Business Brokers donated a carload of toys, diapers and other goods and money to the Foster Care Support Foundation at the GABB’s recent holiday dinner.
FCSF serves a vital and growing need throughout Georgia by providing free clothing, infant equipment and developmental toys to thousands of children in foster and relative care.
The foundation serves basic-care (costs reimbursed less than $25 per day) foster children residing in Georgia’s foster homes, administered by the Division of Family and Children Services (DFCS) and children housed by private agencies. They also serve grandparents raising grandchildren and parents caring for relative’s children for a limited time. The Foster Care Support Foundation is a 501c3 non-profit organization.
You can help the foster children of Georgia in many ways:
- Donate time by volunteering with us or become a mentor.
- Donate goods for the children or other items that we can sell.
- Donate funds to help with our operating expenses.
The foundation often needs specific items to fill shortages.
They take donations Tuesdays through Saturdays between 10am and 3pm.
Items taken are processed to provide the goods needed to give to the children.
Items not usually taken by foster parents or not child friendly are processed and go to their resale shop to help raise funds for the program.