How to Write an Effective Business-for-Sale Listing
Georgia Association of Business Brokers can now post business-for-sale listings on the new GABB website. But, as BizBuySell points out, it’s important to create a well-written online listing. You want to attract qualified buyers. According to BizBuySell’s latest demographic survey, business buyers tend to be college educated and earn over $100,000 per year. Buyers are more likely to respond to listings with these specific attributes, according to the website.
1. Specify a location.
Most buyers search for a business by state, many by a specific county. Confidential listings receive more views when they included a location.
2. The listing appears in their search category.
More than a third of prospective business buyers search in a specific category of business. You can improve that percentage by selecting two or more appropriate categories for your listing.
3. Include key financials.
Most buyers want to know the asking price, followedg by cash flow. Including these important financial details makes it easier for serious buyers to find your listing in a search and contact you.
4. A great headline.
“Profitable coffee shop in busy shopping mall,” and other headings with key details are better than “popular cafe.”
5. A well-written description.
A good description has all the essential facts, such as the business’s strengths and potential, number of employees, the owner’s reason for selling, and opportunities for expansion. Beware of exaggerations. A hyped-up listing will alienate serious buyers.
6. An attractive photo.
Even if you cannot use a photo of the actual business for confidentiality reasons, you should still post a stock photo. A good site to find generic, free stock photos is Pexels. The GABB administrator can also help you find photos. Buyers are more likely to notice listings with photos.
7. Seller financing!
Experienced business brokers know that financing is one obstacle in selling a business. So it’s a huge advantage if the owner is willing to carry part of the financing. Seller-financed businesses are more likely to sell than those that are not.
8. Broker contact details.
Your listing should include details on how to reach you easily. Every prospective buyer should receive a response from their inquiry within the first 24 hours. A slow response might mean you miss a qualified buyer.
The GABB website’s new listing feature is still undergoing improvements, so please let us know if you have suggestions for using this feature. To date, this feature is included in your GABB broker membership at no additional charge. For help with this feature, please contact GABB Executive Director Diane Loupe at georgiabusinessbrokers@gmail.com or GABB President Dean Burnette at 912-247-3209 or dean@b3brokers.com.
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Can you Understand Your Buyer’s Key Motivations?
Negotiations can be tricky affairs. One wrong move can undo a tremendous amount of work. In negotiations, it is best to take a moment and think about the other party’s motivations.
What are their needs and how best can you meet them? Understanding where your buyer is coming from increases the chances of a successful negotiation.
What Appeals to Most Buyers?
When it comes to selling a business, you likely will not know your buyer personally. This means that you will not know what they value most, how exacting their standards will be, and how easy or challenging they will be during negotiations. That’s why it is imperative to err on the side of caution and act in such a way that would appeal to most buyers.
Ensuring that your business is in strong financial health means that your business will be appealing to both a corporate executive as well as an individual buyer with a leadership/managerial background. Keep in mind that individuals who buy businesses will want a strong ROI, and often they will want the responsibilities that accompany that investment to not interfere too greatly with their current lifestyle.
Playing into Emotions
In general, buyers tend to be the most excited at the beginning of the sale process. It is at this point that you can expect your buyer’s passion to be its strongest. As a result, the first stages are when you want to keep your presentation and approach the most realistic. The reason is that once the surge of passion has worn off, your buyer may otherwise feel that you have tried to oversell your business.
Being Forthcoming with Information
It is quite common that you will not at first know if your buyer has previous experience in your market. As a result, you shouldn’t assume that they understand anything about your business or industry. In short, it is definitely in your best interest to be very honest about your business and what is involved in running it. If there are issues that they will invariably discover, then it is best to go ahead and disclose those issues early on as it establishes trust and goodwill.
Understanding Expectations
Another area to consider is what a buyer may expect of you after the sale. A buyer who already possesses a background in your niche would already be very familiar with the ins and outs of your industry. Having you around after the sale may not be viewed as necessary or beneficial.
However, with that said, the exact opposite may also be true. You may be dealing with a buyer who is in dire need of your expertise. These factors could be of critical importance in what you offer your buyer in terms of your availability. Again, that’s why it’s best to not make assumptions and make sure your terms would appeal to a wide variety of backgrounds.
An Investment of Value
Invest the time to understanding your buyer’s motivation. The more you understand what it is that your buyer wants out of the transaction, the greater your chances of focusing on the areas of your business that best match those expectations.
When it comes to the motivations and concerns that prospective buyers may have, a business broker can add a new level of understanding. The value that your broker adds to the process of selling a business is difficult to overstate.
Copyright: Business Brokerage Press
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Understanding M&A Purchasing Agreements
M&A purchasing agreements can have a lot of moving parts. Meghan Daniels, managing editor of Axial, outlined the components of such agreements in. “The Makings of the M&A Purchase Agreement”
Components of the Deal
Mergers and acquisitions (M&A) are transactions in which the ownership of companies, other business organizations, or their operating units are transferred or consolidated with other entities. Purchase agreements cover everything from definitions and executive provisions to representatives, warranties and schedules, indemnifications and interim and post-closing covenants. Indemnification provisions help define who should be liable for issues that arise after the deal closes. The closing conditions detail requirements for buyer and seller between the signing of the purchase agreement and the ultimate closing date. Such agreements also have “break-up fees” that detail the circumstances either party will be able to terminate the deal and whether the party terminating the transaction will pay a set fee to the other side.
Advice for Sellers
Negotiating a purchase agreement (as well as the different stages involved in finalizing that agreement) can be both time-consuming and stressful, Daniels warns business sellers.
As any good business broker will tell you, business owners have to be careful not to let their businesses suffer while they are going through the complex process of selling. Selling a business is hard work, and this fact underscores the importance of working with a proven broker.
Likewise, any serious buyer will look quite closely at your business’s financials, yet another reason to work with key professionals during the process. Business sellers risk losing the sale altogether if the financials are off; so don’t wait until the last moment to get your “financial house in order.”
The sooner you begin working on getting your finances together, the better off you’ll be.
Use Trusted Pros
During negotiations to sell a business, tension is inevitable because every party is looking to protect their own best interests, Daniels warns. Having an experienced negotiator in your corner is a must. Make sure your negotiator has bought and sold businesses in the past, and they will understand what pitfalls and potential problems may be lurking on the horizon. The sale price isn’t the only variable of importance, Daniels notes. The terms of the deal matter. Such terms include “how much control will you have, what stake is being transferred, is there any seller financing, (and) what are your liabilities” after the closing?
The bottom line is that there are many reasons to work with a business broker. Brokers who are members of the Georgia Association of Business Brokers have committed to a code of ethics and understand the diverse complexities of an M&A purchase agreement. They also have experience helping business owners organize their financial information and are valuable partners during negotiations. For most business owners, selling their business is the single most important business decision they will ever make. Find someone who understands the process and can act as a guide through the process.
Copyright: Business Brokerage Press, Inc.
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When the Music Stopped: How a Business Broker Found Insight in a Challenge
You may not think that coping with a health challenge compares to selling a business, but former GABB President Eric Gagnon found similarities and grew. Eric and his wife, Robin, are the founders of We Sell Restaurants, the nation’s largest restaurant firm focused on selling restaurants. Both are GABB members and members of the 2019 Million Dollar Club.
Many of you may not know that I have experienced three ear surgeries in the last 12 months, all of which have left me fundamentally without hearing. That creates a pretty large challenge as I LISTEN to people for a living.
I have been without hearing in one ear for my entire life, a fact most of my clients and business associates would have never known. It didn’t stop me from pursuing an amazing career and learning English as a second language. French is my primary language.
How am I coping? I use the same approach for different phases of this challenge that a buyer, a seller or a broker would use to keep marching forward. I also use a lot of prayers and self-motivation, two universal tools that everyone should use daily.
Originally I was told by one of the best ear surgeons in the U.S. that I had an 80% chance my hearing would improve with the first surgery and less than a 2% chance I would go deaf. According to the specialists, the remaining ear issues in my only hearing ear would go away.
Translate this into a buyer’s language: “I’m buying a deal making strong money and proven books.” What can go wrong? Let’s do this!!
We scheduled the first surgery and went through all the testing and pre-op questions. In buyer language, we entered into a “purchase agreement” and did the first surgery. I was told to prepare for the worst — up to three months with no hearing. Once I woke up, to everyone’s surprise, especially the doctor’s, I could hear immediately!! LOUD and clear. In a buyer’s world, this would be equivalent to: “Initial due diligence fantastic. Almost too good to be true.”
Unfortunately, three weeks later, my hearing started to deteriorate. The doctor thought it was probably an ear infection, and said, “Take some meds, it will clear up.” Two weeks later, with no improvement, he says, “come see me.” I drive three hours each way so they can stick needles in my ear, do an audiogram and learn my hearing is rapidly deteriorating. Then the doctor says, “What about wearing hearing aids?” Remember, originally I heard perfectly from my single ear with no hearing aids.
The Broker in me started to kick in and realized this was equivalent to: “Expect some changes in the deal terms.”
Shortly thereafter, once again my hearing deteriorated to the point the hearing aids were useless. Back to the doctor. Read here: “Buyer is very upset with current condition, but due diligence is over so he can’t walk away from the deal and must find a solution.”
Doctor reveals that scar tissue is growing between the bones which impairs my hearing. Solution: Second surgery to laser out scar tissue and rebuild one of the bones. Read here: “as a broker, we’ve got new movement. We find out why we have this problem and the seller is willing to fix it. That’s great news. Buyer is now happy with the offer and keeps moving forward.”
Surgery #2 happens. I wake up with slight improvement in hearing and even back to my best hearing performance with the hearing aids two weeks later. Buyer thinks: “All problems fixed. Everyone is happy and we accept some compromise – let’s go to closing!”
Wait a minute. Four weeks later, back to square one. Hearing has dropped beyond hearing aid capacity and declining. The broker in me is thinking: “Maybe this isn’t the right deal for everyone, but how do we minimize damages?”
At this point the right thing to do was to walk away from this deal and find a new and better one. The new deal for me becomes a new doctor at the University of Arkansas Medical Center thousands of miles from home.
His assessment: Plan A: A new surgery to replace two bones with titanium parts that scar tissue won’t cling to. Success will be hearing well with hearing aids without any loss over time. Plan B: if Plan A fails, we will do a cochlear implant 60 to 90 days later, and this will work. As a broker, I like the “no surprises” approach. Always be ahead of the game, with a backup plan. This was music to my non-hearing ears!
Surgery #3 happened on Oct. 3. I spent two weeks with no hearing at all while my ear healed from the surgery and could not accommodate hearing aids. Once again, that was a little scary but different than the first two surgeries in which I heard quickly but failed in the long run.
Ultimately, hearing aids went back in and the results are not good. The last surgery did not heal the issue. I have now been fundamentally without hearing for the last year. The next step is a cochlear implant. This is a device implanted that goes directly to my brain stem. I will re-learn “hearing” in this fashion after the surgery and therapy.
During this time, I still maintained a full book of business and worked to the fullest of my abilities. Technology has advanced to help me with hearing impairment. I carry two phones. My normal iPhone has a Bluetooth connection to my hearing aids, and my Android that translates voice when I put it near sound (like speakers or a person). Some people did not even notice I was using a device to hear them. Others noticed a delay while I ‘read’ their comment before responding.
It would have been easy to give up and pity myself, but I chose to focus on what I have learned from the experience to make myself better. Here are some of the benefits I gained.
I listen better: At the beginning of this blog I said I LISTEN to people for a living. I used to do two or three things at the time while on the phone. Now I must read the phone so I cannot do any other task. I am now FULLY listening to the buyers and sellers on the phone and it made me a better broker for it. I also restate their comment or concerns which is also helpful to make sure I understood what they said. My results also reflect that this year.
Every call and every interaction must be meaningful, since listening is very tiring. I must make sure that this conversation worthy and productive, and if it’s not, I politely end the discussion and find a productive activity to engage with.
I focus better: My focus is more intense. If you cut out outside noise you will see things much clearer in focus. This applies when I look at financials as well as when I engage in my hobbies. I rely a lot more on visuals now than what I hear.
I write better: I also became a better writer as I have been sending lengthier and more detailed emails.
My interactions with my family have changed. Most couples married for nearly 20 years will just toss out a comment from across the room with music or TV in the background. My wife and I must be very close to one another for me to recognize that she is speaking. Since we run a business together, that means we talk a lot. We have relied on more communication by touch, where she lets me know she’s speaking. I can read her lips somewhat and understand what she’s saying or use my phone. Either way, I’m 100% focused on her and she on me when we are communicating. This is a great tip for any married couple.
My professional life has changed. I cannot sign up for certain functions I would normally attend. Board meetings are tough because so many people are speaking, and I can’t hear what is being said in a large table environment. My wife and I often speak or lead round tables at industry functions and that has not been possible without her picking up on most of the questions and bringing me in on the back end.
Make the Best of Every Single Day. This is part of my destiny and my journey. I am embracing it and making the best of it every single day. In the best-case scenario, I have just a few more months without the music and things will get better by the first quarter of next year with the fourth and final surgery.
Either way, I have spent a year without music and gained a new appreciation for communication.
Eric is an industry expert in restaurant sales and holds the Certified Business Intermediary (CBI) designation from the International Business Brokerage Association (IBBA). A frequent writer and speaker in the restaurant industry, Eric co-authored Appetite for Acquisition, an award-winning book on buying restaurants.
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Key Mistakes that Could Impact Your Sale
The old saying, “an ounce of prevention is worth a pound of cure,” most definitely applies to any business owner that believes he or she will someday want to sell his or her business. The bottom line is that every business owner has to transition out of ownership at some point. In a recent Inc. article, “Four Mistakes That Could Lower Your Business’s Value and Weaken Its Salability,” author Bob House explores 4 mistakes that could spell trouble for business owners looking to sell.
No doubt House explores some excellent points in his article, such as that you should always have what he calls, “a selling mindset.” The reason this mindset is potentially invaluable for a business owner is that when operating in this way, sellers are essentially forced to stay on their toes.
Or as House writes, “a selling mindset encourages continual innovation, growth, and investment, helping your business stay ahead of the competition and at the top of its potential.” Having a “selling mindset” means that business owners have no choice but to perform periodic reality checks and access the strengths and weaknesses of their businesses.
Mistake #1 Poor Record Keeping
For House, poor record-keeping tops the list of big mistakes that business owners need to address. As House points out, both potential buyers and brokers will want to examine your books for the last few years. The odds are excellent that before anyone buys your business, they will look very closely at every aspect of your financials, ranging from your sales history to your operating costs.
Mistake #2 Failure to Innovate
The next potential mistake that business owners need to avoid is a failure to innovate. House notes that a lack of tech-savviness could make your business less attractive to prospective buyers. The simple fact is that virtually every business is now impacted in some way by its online presence, whether it is the quality of that presence or lack of it altogether.
For House, a failure to maintain an active online presence could be associated with a failure to innovate. Even if your company is innovative, if you do not maintain a coherent and robust online presence, this could portray your company in a negative light.
Mistake #3 Unstable Workforce
House also feels that having an unstable workforce could spell trouble for your business’s value and negatively impact its salability. Most prospective buyers will not be very eager to buy a business that they know has a lot of employee turnover. In general, new business owners crave stability. Attracting and keeping great employees could make all the difference when it comes time to sell your business.
Mistake #4 Delayed Investments
The final factor that House notes as a potential issue for those looking to sell their business is delaying investments and improvements. House states that it is important for owners to continue to invest even if they know they are going to sell. Investing in your business can help it expand, grow and showcase its potential future growth.
Another excellent way to prevent making mistakes that could interfere with your ability to sell your business is to begin working with a business broker. A top-notch broker knows what mistakes you should avoid. This experience will not only save you countless headaches but also help you preserve the value of your business.
Copyright: Business Brokerage Press, Inc.
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