How Business Brokers Can Close A Deal Faster
Photo by Redd Angelo. https://unsplash.com/@reddangelo16
Susan Kite, Vice President of SBA Lending for The Brand Bank moderated a panel of SBA lenders for the GABB April 25 meeting.
She offers these suggestions to business brokers on ways to get a deal closed faster.
Get Seller Information as quickly as possible after signing a listing agreement. That information should include:
- Last 3 years’ Federal tax returns (if sole proprietor, get Schedule C)
- YTD interim statement to include Balance Sheet & Income Statement
- Previous year’s interim statement of same period
- Aging of Accounts Receivable and of Accounts Payable
- Listing of all assets being sold – and their market value (with serial numbers for any asset valued at $5,000 or more)
- Letter of Intent or Purchase Agreement
Manage Seller expectations
- They will likely have to take a Seller Note of 10% to 15% of sales price
- They will need to update Interim Financials and Agings every 60 – 90 days
Get Buyer information as soon as possible
- Last 3 Years Federal Tax Returns – Personal and Affiliate
- Recent Personal Financial Statement – give them form 413
- Business Plan (good template is at sba.gov)
- Financial Projections (monthly for Year 1 / Annually for Years 1-2)
- Personal Information Form 1919
Manage Buyer expectations
- Buyers will have to put in cash equity of 10% to 25% of sales price
- They may have to pledge their home or other real estate
- They will need to assign to the lender life insurance
- A business acquisition loan process is not like buying a home – it may take longer than they expect.
Lender Info
- Use a GABB Affiliate lender that knows business acquisition SOP rules
- Get with a lender early and use them as a resource
- Realize that to lenders, EBITDA is more important than SDE
- All add-backs must be verified
- Have your Seller and/or Buyer prepared with an organized application package
- The process will be much faster when information is provided quickly when requested
For more information, contact Susan Kite, VP SBA Lending / The Brand Bank / skite@thebrandbank.com / 770-595-9734