Selling a Business Q&A:
How do I find the right Intermediary? Referrals are a great way to find an
experienced  Intermediary. The International Business Brokers Association is a
good place to start and other on-line business search services are also excellent  
sources. Some key items to look for when choosing an Intermediary is experience
with deal structuring, their level of negotiation skills and training, do they understand
complex finance issues, are they up to date on current valuation methods, what
additional education and training have they completed and be sure the Intermediary
you choose specializes in business sales and acquisitions. It may also help to ask
for references.
Selling a Business Q&A:
What can I expect of an Intermediary? The professional Intermediary
will provide you with the knowledge and skills necessary to guide you through the
complex process of selling your business. They will know how to price and
package your business to optimize value. Before you go to market a strategic plan
will be designed to focus on specific buyer criteria so as not to waste needless
time and effort with the tire kickers. They will be experts in negotiation and know
how to deal with opposing lawyers, accountants and other advisors that may be in
the process. Confidentiality will be paramount when discussing your business
with potential buyers. All buyers will be pre-qualified to determine their depth of
experience and financial ability to complete the contemplated transaction. The
Intermediary should provide you with a detailed confidential business review, three
years financial analysis, price justification, a market evaluation and an outlined
strategic plan on how your business will be presented to the market.
How do I find the right Intermediary
What can I expect of an Intermediary
Do I need a valuation
What documents will I need
Will I have to offer seller financing
When is the right time to sell
What terms can I expect
What fee do I pay
Do I need a Valuation? Absolutely, businesses are valued by using
multiples of discretionary earning or EBITDA and industry formulas compared to
sales revenue.  A business valuation will tell you the strengths and weaknesses of
your company. You will be prepared to overcome objections once due diligence
and negotiations commence by having a business valuation showing where your
company has been and where it is going. A business valuation with substantiated
research will net you the highest selling price and drive the transaction value
allowing for the least amount of adversity with the buyer and their advisors.
How long does the process take
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What documents will I need? Get all financial documents in order; three
years of corporate tax returns with corresponding financial statements and clean
up your balance sheet, interim financial statements, list of all assets included in
the sale, the current lease agreement if applicable, a list of all employees (not by
name) but including duties and compensation and a list of all leased equipment.
Proper documentation with substantiated income will maximize your gain.
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Will I have to offer seller financing? That depends on the selling price
in relation to the discretionary earnings (NOI + amortization/depreciation +
interest expense + owner compensation and perks). If the NOI of a company plus
discretionary earnings will support the buyer with a reasonable salary plus cover
debt service and the debt service coverage ratio then you may not need to offer
financing. On the other hand for example a company selling for $1MM with
discretionary earnings of $150M will not allow the buyer a reasonable salary plus
pay debt service at todays interest rates.
When is the right time to sell? Sell when your company is on an upward
trend to maximize the purchase price. Sell when your industry is in high demand
with buyers in the market place. If you lease space it is preferable to have five to
ten years remaining on the term. Proper planning and organizing the right team of
professionals will maximize your pay day. Don't let time spoil the fruits of your
labor.   
What terms can I expect? In todays market with rising interest rates more
sellers are faced with terms of three to ten years with twenty five to fifty percent
down. Interest rates will range generally from prime to two over prime. Balloon
payments are also common practice. As interest rates rise the seller will be put in
the position to consider seller financing to complete the transaction.
What fee do I pay? The right Intermediary should be able to add value to the
transaction of at least 10 to 20%. The fee is generally negotiable and
percentages of compensation depend on the scope of the engagement. The
agreement should clearly define in detail the responsibilities of the intermediary .
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How long does the process take? Generally  transactions between
$500M to $1.5MM can take from 6 to 12 months with transactions between
$1.6MM to $5MM  taking up to twenty four months. Industry, location and timing
are other issues to consider.
410-757- 4965
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