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3 questions that all business owners always ask when selling their business

questions when selling

Questions when selling

Besides the super obvious question asked when selling a business – ‘How much is my business worth?’ to which there is no straight, easy answer, here are three other questions that we get asked by business owners all the time – along with our answers.

Q1: If I am thinking about selling my business, when should I start planning?

It’s never too early to think about selling nor to start planning. Ideally, you should have a 2-3 year plan to allow yourself time to get the business ready for sale. It’s like selling a house; you need to invest a bit of time, money and effort to get it looking its best to attract the right buyer. The market cycle does matter, as does the time of year. You need to have plenty of patience and plan well and accurately in order to maximize your business’ value.

Q2: What should I be doing to prepare my business for sale?

In a word, everything! Make sure that everything is in order and above board, especially your finances. So, know your numbers. Protect your business and have signed customer contracts where possible. Also make sure that your sales forecast is accurate and that your historical figures back up your story and you hit those numbers. Look at your business as if you were the potential buyer and plug all those holes that you may have.

If you’re looking to improve the bottom line to make yourself more attractive to potential buyers, implement efficiency changes. These need time in order to happen and to make a positive impact on your bottom line.

Q3: Do I have to use a broker to sell my business or can I sell it myself?

It really depends on your business and what you personally want to do. For smaller businesses, under $1m, the traditional brokerage fees or boutique firms can be uneconomic for you especially as some brokers charge an upfront flat fee plus a percentage on successful sale of the whole value. However, there are a number of brokers who will work on success-based fees and can be worth it as they help you market your business to a wider audience.

Are you sure you are the right person to spend time trying to sell the business? Can you afford to spend time on selling the business? You may not have the time as you are already doing a 12 hour work day and juggling numerous balls – don’t forget those forecasted numbers need to be achieved too.

Getting the word out will be expensive too as well as time consuming. You also may not have the reach nor the right connections, brokers subscribe to online business sale marketplaces and this may be an effective cheaper way to market your business for sale than if you were to go direct to one of online business sale marketplaces as they are quite expensive to list on – think $150 per month!

So it could pay to have the right broker ‘seal the deal’ for you.

Bear in mind that the process of selling a business is unique and there is no fixed blueprint that can be used to make the business sale process go like clockwork. There are just too many ever-changing factors involved. And most of those are outside your control. Rest assured that we are here to help demystify the process, reduce your risk, help your odds of getting what you want from your business sale and make sure that you are asking the right questions.

Joanna Miller helps business owners navigate their way through the start to finish process of selling a business.  Her specialty is helping owners understand how to prepare and make the most of their business sale process to maximise their company’s value. To understand how you can sell your business quickly for the highest sales price, purchase her book, “How To Sell A Business: The #1 guide to maximising your company value and achieving a quick business sale”

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Why signed client contracts are gold dust especially during a business sale

client contract

When you win a new piece of business, having clients sign a contract with your business should be part of your everyday operational procedures. After all, you and your team have done the hard work, which is winning the business in the first place.  What’s some paperwork compared to that?!

Speaking from personal experience, you will generally find that the paperwork trail is left to the last minute and can be easily forgotten about as now the business is busy making sure that its going to deliver it. Sometimes the paperwork gets lost or the contract is drawn up and then gets lost in legalese for months on end.

Whatever the reasons, make the time and ensure that you have signed client contracts. It will be worth it as it helps keep your business valuation up. Buyers love to see signed client contracts, it’s practically an annuity stream. You should love them too!  They simply are gold dust as they help with forecasting revenue and unless something goes horribly wrong – guaranteed income.

Encourage contracts to be drawn up and signed

Make contract signing part of new business process and take a proactive approach. You could offer the sales person an incentive / additional commission / bonus for getting the contract signed within a certain period. If that’s not quite right for your business as contracts are handled by your financial controller or a contracts manager then make it clear what timeframe contracts need to be signed in and manage it. Hold a monthly review where you check on the progress made. The longer you leave an unsigned contract, the harder it will be to get it signed because of i) amount of time lapsed  ii) change in personal – oh, Fred no longer works with us and I’m not sure what you agreed with him…

You may want to record the different ‘stages’ of contract signing so its easier to mark progress made. Here are some example categories where the total count for each would be presented. The information can be further drilldown on as needed:

  • Unsigned (no info)
  • Unsigned (awaiting internal review)
  • Unsigned (on hold)
  • Unsigned (reviewed, awaiting internal signature before posting)
  • Unsigned (posted, awaiting client signature)
  • Signed (by client and scanned to filesystem)

Of course, there may be the rare occasion where an unsigned contract works in your favour. For example, there could be a price reduction based on increased volumes – which only comes into effect with a signed contract. But you should have worked that into your financial model at the outset and be able to bear the reduction in your profit margin. (In other words, that’s a poor excuse for not having the contract signed!!)

All my client contracts are signed – anything else?

If you’re reading this thinking ‘all my client contracts are signed’ give yourself a huge pat on the back. But that’s only one part done before you start celebrating, are all your supplier contracts signed too? And have all your signed contracts, suppliers and clients, been scanned and available electronically for the data room?

And that’s not all….

As well as having your signed contracts signed, do you have all your client contract key details in a single place for a quick and easy reference? Key contract details include:

  • The client’s name (!)
  • Is the contract signed or not?
  • How long is the contract for?  1 year, 3 years
  • How and when does it expiry?
  • Extension terms
  • Pricing
  • Tier

Our Contracts Summary Template has all this key information in a spreadsheet and as such as will help you manage your client contracts better and you will be in a position to answer these questions as well as being proactive in retaining the business when it comes up for renewal or extension (on the basis that you still want their business).

  • What revenue does the contract bring to the business?
  • Is the client one of your top 3? Top 5?
  • Are there any price changes during the contract lifetime and are the finance team aware of it?
  • Do you know when your next 3 client contracts are due to expire?
  • Does the contract need something in writing by a certain date in order to extend it for another term?
  • Which contracts aren’t signed yet and why not?

During a business sale, you want to make sure that none of those signed contracts ends. So, do a deal to secure its extension, remember it’s going to impact your business sale price.

If a contract does ends, don’t lose any of the original details and keep a record of that too along with why it couldn’t be extended or renewed.

It’s worth spending time on contract gold dust especially when it has a direct impact on how much your business is worth to a potential buyer so start reviewing the state of your client contracts today!

Joanna Miller helps business owners navigate their way through the start to finish process of selling a business.  Her specialty is helping owners understand how to prepare and make the most of their business sale process to maximise their company’s value. To understand how you can sell your business quickly for the highest sales price, purchase her book, “How To Sell A Business: The #1 guide to maximising your company value and achieving a quick business sale”

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How to grow and possibly exit your business with your sanity intact

Exit Your Business

Over 75% of business fail within 10 years

According to the U.S. Small Business Administration, approximately 50% of all new businesses survive five years or more and about one-third last 10 years or more. That means that only 25% of businesses last for longer than 10 years. Yikes!

Considering the high rate of failure, wouldn’t it be in every business owner’s best interest to consider an exit plan within 5 years or 10 years at most? Seriously – to beat the probability of failure doesn’t it make sense to set up a business with the sole intention of selling it before it fails?

I might sound a bit cynical here but let’s face the facts – you have a 50% chance of being around after 5 years and your probability for success diminishes the longer you own your company.

Is it possible to create a company for the sole intention of selling?

Starting and growing a business myself, I know first-hand that there’s simply not enough time to grow a business and consider an exit plan. When I first started, my plan was to build my company for 3 – 5 years and then sell it. After 8 years of work, work, work I consider myself lucky to have been successful (financially – not mentally!) yet the company was in no shape to sell. Fortunately for me, I exited through a management buyout; otherwise I fear I’d be in the loony bin right now. I loved my company, but I was so tired of running it.

The gurus all say to start with the end in mind. They highlight the importance of planning an exit before you start, yet it’s hard enough to plan a forecast for 12 months. Things change so quickly – technology helps or hinders your business. New regulations are forced upon you. Recessions hit.  And of course, business owner life gets in the way – income targets need to be met, salaries have to be paid, HR issues have to be managed and the plates have to keep spinning.

It’s not about thinking with the end in mind (which could be to exit your business) – it’s more about thinking how to reach the end with a mind!

How can you grow your company, exit your business and keep your sanity?

I think there are several solutions to reduce the likelihood of business and/or personal failure, so all is not lost.

  1. If you haven’t yet started (or are just starting) a business, make darn sure that you’re super passionate about your product/service in addition to running a company. I’m positive that many businesses fail because business owners are chasing money rather than creating an offering that they truly feel passionate about.  Every business owner that I know that’s had a business over 10 years absolutely loves what they do. (I admit it, I chased the money, I had very little passion for the product/service I offered.)
  2. If you currently own a business and are getting tired of it, it’s only going to get worse, so start thinking about an exit now! There are so many things that can be done. You can pull yourself out of the business while teaching others to run it, you can consider succession planning – setting up family member to take over or perhaps getting it ready to sell. The key here is don’t wait until you burnt-out.  (I admit it – I waited until I was burnt-out and it wasn’t a pretty sight).
  3. Don’t pretend that you’re happy. In today’s age of positive thinking we business owners give ourselves pep talks all the time. We tell ourselves we’re happy, we’re successful, and we’re the rulers of our own dominion. Additionally, we feel a pang of guilt to admit we’re unhappy with our situation. Heck – who are we to complain? We’re our own boss, we control our pay check, we can come and go as we please. It took sheer determination and tenacity to get our business going – we can’t allow ourselves to think we’re not happy about the destination we’ve created! Can we? You can only pretend for so long. Sooner or later you’re going to have to feel the truth. (I admit it – I pretended I was happy. Everything in my world was smiley faces. It wasn’t until one day when a mentor asked me what I really wanted and my response was, FREEDOM! Up until then I was kidding myself).
  4. Learn the art of outsourcing and delegation. Most business owners, especially in the early days, think that no one can do the job they do as good as they do it. You’ll hear them saying, ‘I wish I could outsource this but it’s quicker for me to just do it myself. Furthermore, it will get done correctly.’ If you say these kinds of things, treat them as a massive warning! You cannot grow and eventually exit a business if you don’t remove yourself from the running of the business. To remove yourself from the running of the business, you must delegate or outsource. Growth is now about you working hard – it’s about you working smarter. (I admit it – no one could do anything as good as me, therefore I found it impossible to delegate. This in turn created a situation where I had to work longer hours and become more and more miserable).
  5. Take the time to understand what is truly important in life because if you think it’s your company, you’re on the wrong track. Our culture is so geared towards making money and owning houses, boats, cars and gadgets yet none of that makes our heart sing. Yes – money is important, but once you have ‘enough’ more money doesn’t make life better. The most important thing in life is love – it’s giving love and receiving love. And I’m talking about love from humans – not the love you give your company! When you’re on your death bed you’re not going to reflect back and wish you worked harder or earned more money. Relationships with your friends, family and community around you is what really matters. Whether your business fails or succeeds I can guarantee that having loved ones with you for the journey will make all the difference in the world. (I admit it – I was married to my company. Nothing else mattered. My friends were my employees. It wasn’t until I exited that I realized how removed I was from the most important things in life).

So there you have it. That’s Kim’s take on growing, exiting and staying sane through your company journey! Any comments? I’d love to hear your thoughts?

Kim Brown, Co-Founder of Business Wand, helps business owners navigate their way through the start to finish process of selling a business. Her specialty is to help owners cut costs and increase profits prior to sale. To understand how you can sell your business quickly for the highest sales price, purchase the book, “How To Sell A Business: The #1 guide to maximising your company value and achieving a quick business sale”

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5 Ways to prepare for your Business Sale Completion Day

Business Sale Completion Day

When my lawyer looked at me and said, ‘Kim – congratulations, you’ve successfully completed the deal,’ I felt numb. I was speechless and devoid of any feeling. In fact, if it wasn’t for my body I would have evaporated into the air. I had survived my business sale completion day!

After spending months of negotiating, emotional ups and downs in addition to visualizing my freedom I suppose I never took the time to consider how I’d feel the moment I sold my ½ of my business. I remember signing several pieces of paper, watching my lawyer for cues on what to say and not say.  And I remember thinking how odd it was that my ex-business partner (the person buying me out) was trying to make small talk throughout the completion procedure.

After a few moments of feeling numb, I hugged my solicitor, left his offices, got in my car and still felt numb. I kept telling myself that ‘the transaction occurred…the money is in my bank…I’m out…I’m free, it’s time to celebrate’ yet emotionally I couldn’t feel anything.

Over the next few days, I started to feel again. I was so fearful that the transaction would never occur that I forced myself to remain unemotional about it. And when it did happen I think I went into some sort of emotional shock!

Anyway, that being said, preparing for the actual business sale completion day is worth setting time aside for. And I mean that from an emotional and practical perspective. The night before the big event, consider the following 5 preparation suggestions.

5 Ways to Prepare for your Business Sale Completion Day

1. Packing list.  Some Completion Days can last for days. There are very business times and then there are times when you’ll be sitting around doing nothing. Consider packing clothes, toiletries, special food you like (snacks), a good book to read and anything else to help you throughout the day. Also, prepare your clothes, driving instructions and timings before you go to sleep so that you can wake-up and get to the Completion Offices with the least amount of stress as possible.

2. Negotiation Sticking Points. Are there any outstanding negotiation points that have to be resolved before the deal is done? Where you stand on them? Don’t leave this to chance. Take the time to consider what you will and will not settle for. Visualize various scenarios and focus on how you’d like any sticking points to be resolved. Doing so will better prepare you for the real thing!

3. Completion Day Process. Do you know the stages that are necessary to complete? Many solicitors will tell you that they’ve got everything taken care of, but sometimes it’s nice to know where you are in the process. There’s a load of required documentation and legal papers to sign. If you know the process you can check it off as things happen. By doing so you’ll feel a higher sense of control if you understand what’s actually happening.

4. Consider the post-completion tasks. Usually when entering a Completion Day, many business owners are more interested in completing rather than considering what happens after the deal is done, but keep in mind there are quite a few admin issues to take care of. Things like paying the advisors, diarising future consideration payments and expiry dates for restrictive covenants are just a few. Be prepared to complete, handle after completion tasks AND the next suggestion…

5. Visualising the perfect completion process. It may seem a bit air fairy but you have more chances of getting what you focus on. By focusing on the perfect completion process you’ll train your mind and body as to what you want and how you want it. Furthermore, you might avoid my experience of numbness. Remember to think about the celebration and how you’ll feel once the deal is done and dusted.

This article offers a quick and general outline on how to prepare for your business sale completion day. If you’d like a ‘template’ that will guide you through the whole process, outline what to pack, how to prioritise negotiation points, what will be needed for the post-completion admin in addition to how to visualise a perfect business sale completion day, please check out our pack, “The Seller’s Completion Day Checklist Pack.”

Kim Brown, Co-Founder of Business Wand, helps business owners navigate their way through the start to finish process of selling a business. Her specialty is to help owners cut costs and increase profits prior to sale. To understand how you can sell your business quickly for the highest sales price, purchase the book, “How To Sell A Business: The #1 guide to maximising your company value and achieving a quick business sale”

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How to make sure that you are ready to answer due diligence questions

due diligence questions and answers

due diligence questions and answersSo there you are, you’ve just finished uploading your last document into the virtual data room and ticked off the corresponding item from the list provided to you by your solicitor or business broker.

Time to relax, sit back as you’re now ready to field all questions from potential buyers ….. really?!

How do you really know that you are ready? You could wait until the due diligence questions start coming in or, with better planning, how about doing a practice dry run through?  You’ve got the time now to do this and we’ve got just the thing, our due diligence questions packs. Each pack has 250 unique questions and come from Joanna’s due diligence process so they were all real questions that had to be answered! If you can quickly answer each one by simply quoting the right data room reference or if they aren’t applicable to your type of business and you can just ‘N/A’, you definitely are ready!

It’s really worth doing a practice dry run because when the due diligence questions start to come in thick and fast, you’ll find it easy to bat the answers back. This in turn will free you up to focus on the business sale negotiations and you can concentrate on keeping your business value up.

If you’re wondering what type of questions the packs contain, here are six randomly chosen for you to quickly answer with just your matching data room reference number. If the question is applicable to your business and you haven’t got the reference number readily to hand, now’s the time to add to your data room and use our pack to really make sure you’re all prepared!

  • Sales order book and pipeline, by product/service, rated by percentage likelihood to win new business income, and the expected time frame for each opportunity
  • Analysis of revenue by customer for the last two financial years (including customer names).  Details of financial terms (including commission rates) with top 15 customers for each of product/service
  • Details of any benefits/expenses provided to employees/directors, copies of any PAYE Settlement Agreement and P11D dispensation
  • Sickness absence and staff turnover rate for past 12 months
  • Copies of insurance policies
  • List of customer complaints/warranty claims within the last two years

 

Fielding questions successfully

If your business broker hasn’t mentioned it to you already, you should have an efficient system in place to field all due diligence questions successfully. Make sure that all questions from each potential buyer is entered into their own spreadsheet. This should be done by the buyer’s representative themselves and all questions fielded through one person because there could be a number of people on the buyer’s side carrying out the due diligence. This system provides control and allows you to quickly update it with the necessary answers and upload the latest version to the data room. Date raised, By Whom, Question, Functional area, Data Room reference and commentary should all be column headings.

As your due diligence period moves ahead you’ll find that the same question is asked in a different way by different potential buyers and don’t be surprised if they ask the question without even visiting the data room to see if the answer is there!

The quicker you can demonstrate that you have all the answers to hand, the more confident the potential buyers will become and in understanding your business better, they should realise the value of the business and want to have it even more bringing you one step closer to completion day.

Kim Brown, Co-Founder of Business Wand, helps business owners navigate their way through the start to finish process of selling a business. Her specialty is to help owners cut costs and increase profits prior to sale. To understand how you can sell your business quickly for the highest sales price, purchase the book, “How To Sell A Business: The #1 Guide to maximising your company value and achieving a quick business sale”

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Getting to grips with the data room 101

Data Room 101

Data room 101

As part of every business sale process there will be a period of due diligence. During this period, potential buyers will want to make sure that they are really actually buying the business that they think they are! Part of this will mean that all your company documentation and processes will be looked over. All of this information goes into a data room. Before the days of software used to be a physical room with restricted access. Nowadays the same process is replicated, however, software has replaced the physical room. If your business is less than £1million, it’s likely to be done without any special data room software. However for companies which are larger, expect to use data room software.

Time to get cracking!

Instead of waiting to compile the contents of your data room when the buyer starts asking for information. I strongly recommend that you start as soon as possible. This will help make it less stressful as dealing with demanding questions could take its toll, especially if 10 questions are coming at you from 3 different buyers. You don’t need to spend vast amounts of money on the software, just use Dropbox or box.net to get going. Make sure its got a strong password and if storing the information on your laptop make sure that’s secure too.

Data room software explained

There are a number of companies that offer data room software solutions that include helping you set up your data room (for a fee) and helping you keep it up-to-date. Focusing on the software side of things, good data room software features must include:

  • user login and access management – restrict who has access to what and for how long
  • version control – so changes to documents can be tracked
  • document restrictions – such as the ability to limit the document to be viewed online only and disable print options
  • reporting – information and statistics on the documents as well as who’s accessed those documents

It can get quite expensive and I mean into the hundreds if not thousands of pounds as these data room companies use pricing models that can be per page upload and per page stored in the data room. We go into this in much more depth in our ‘Creating the Data Room Pack‘. That’s why its good to have a ‘test’ data room so you can see how many documents you are storing and can estimate the cost of having the data room for the duration of your business sale.

Understanding the data room structure

Having the right data room structure will help find supporting documentation quickly and keep you organised. Every component in the data room will have a numbering scheme – this applies to both folders and files so check out our top-level data room structure sample in our free document samples section.   Filename conventions are also important especially if they are date related.

That was easy, what’s next?

Now that you’re all up to speed with the data room, its software, and have set up your data room structure. It’s time to collate all the information that goes into it. That’s where our Preparing for Due Diligence Checklist Pack  comes in. The checklist makes sure that you store all your business’ documentation, in the right structure ready for those potential buyers. It’s tough work, but going through this process will help streamline your business as you’ll find quicker and better ways in extracting the information from the business for the data room.

It’s never too early to start – so time to get started!

Joanna Miller helps business owners navigate their way through the start to finish process of selling a business.  Her specialty is helping owners understand how to prepare and make the most of their business sale process to maximise their company’s value. To understand how you can sell your business quickly for the highest sales price, purchase her book, “How To Sell A Business: The #1 guide to maximising your company value and achieving a quick business sale”

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My business due diligence experience

due diligence calmness

Due Diligence Naivety

When I first heard the words ‘due diligence’ I wondered what that was all about and was told ‘oh, its when the potential buyers look at your books’.

I took that to meant the business‘ finances; so things like the profit and loss account, balance sheet, bank account statements and the management information reports that we had.

That’s probably true if your business is turning over less than a million. But as my business didn’t fall into that category our solicitor passed over a due diligence questionnaire (DDQ) which ran to 12 pages! It was then when I had an ‘OMG’ moment as I looked through and saw that it covered all the different functional areas of the business.

We started collating the document list ASAP! And to help you know what you’re getting yourself in for we’ve reproduced the list in our ‘Preparing for Due Diligence Checklist Pack’ along with my recommendation for your data room folder structure.

On top of this during the business sale process in order to field and answer all the demanding questions from the buyers, the documents started to pile up.

By the end of the process, for my business, it turned out we had prepared approximately 800 documents! We had to provide examples of everything. Detailed sales forecasts for the next 3 years, samples of our software code (for IPR), a record of the last 2 years salary increases, a list of leavers and reasons why they left the company.

Some of the information was provided by the solicitors, like property searches and they helped with scanning paper contracts as we didn’t have the right tool nor resources to spend on this.

But the vast majority of the documents, 95%, has to come from the business and your business broker isn’t really going to be able to help besides pointing out what documents are essential and missing.

Delegate, delegate, delegate

Preparing 800 documents for due diligence did take a toll on me. Luckily only a core 30 documents changed over time that needed to be updated during the business sale. However, in order to get all the documents ready in the first place, I changed the business operating processes to be more efficient so I could just use the documents as they stood or with minor ‘tweaks’ and at the very least have the right company folder structure where I could locate the information very quickly. I also made sure that processes such as sales, finance, account management were documented which is simply good practice to do.

How you know you’re fully prepared

Having this all in place allowed me to field the questions from potential buyers quite easily and provide the answers within a very short time period, mainly within a 24 hour turnaround time.  Being prepared allowed me to refer them to the right document in the data room to go look at instead of unique answers to each question. And if the answer wasn’t readily available, that’s when it got created and added to the data room.

Of course going around the sales process over five times does make you a pro and you quickly find ways to make it all the more efficient. That’s why I created the  ‘Preparing for Due Diligence Checklist Pack’. It gives you a head start as it includes all the common documentation in a checklist that a business going through due diligence needs.

As long as you have one person that is responsible for managing the data room and can source the documentation from the business whenever needed (this includes 11pm at night), you will find the whole due diligence stage easier and best of all it doesn’t have to all be done by you – allowing you to focus on the business and not in it!

Joanna Miller helps business owners navigate their way through the start to finish process of selling a business.  Her specialty is helping owners understand how to prepare and make the most of their business sale process to maximise their company’s value. To understand how you can sell your business quickly for the highest sales price, purchase her book, “How To Sell A Business: The #1 guide to maximising your company value and achieving a quick business sale”

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How to Stage a Beauty Parade: Selecting the Best Professionals to Sell your Business

How To Stage A Beauty Parade

How to Stage a Beauty Parade – Which Professional Advisors to Beauty Parade?

There are four core professionals available when selling a business and they include a: Business Broker, Solicitor, Accountant and Tax advisor. Retaining professional services is very costly, so there needs to be enough room in your sale proceeds to pay for them and enjoy your own personal profits. Generally, businesses that are selling for over £1m are more likely to use a team rather than just one professional. With so much expense at stake, it’s imperative to know how to stage a beauty parade.

If, however, you’re selling for under the £1m mark there’s still a need for professional services – perhaps not all of them. Cost can be a huge factor. There’s no sense selling out if all your profits are used up by the professionals that make the sale happen!

Regardless, whether you’re selling for over or under the £1m mark, chances are that you’ll need to retain some professional services. One of the best ways to decide the best professional for your requirements is to stage a professional advisors to beauty parade.

A beauty parade is where you ‘interview’ more than one professional service provider within the same profession against the same criteria and scoring system. For example, when a friend of mine recently exited his company, he staged a beauty parade between three different solicitors. He asked each solicitor the same questions and scored them against the same criteria.

If you’re selling for millions, it’s likely that you’ll have a large team and it’s highly advisable to stage a beauty parade for each profession: Broker, Solicitor, Accountant and Tax advisor. It might seem like a lot of work, but your professional advisory team can ultimately make or break your business sale.

How to Find the Professionals

The best way to find business sale professionals is to start asking around. It’s often hard to beat a word-of-mouth referral. Failing that, you can search locally on the Internet, get recommendations from other professionals or if you belong to a business group, find out if they can point you in the right direction. You can also use social media (LinkedIn, etc) to find professionals although you’ll have to be discrete about how you do it.

Sending out a Brief

Once you select several potential professional advisors, depending on your needs, you can then send each company a short concise document outlining your intentions, objectives and time scales. You’ll want to give some history, explain your situation, tell what your company does and so forth and then ask several questions that you can use to narrow down the professionals that you’re most interested in.

The initial brief email is an early qualifying device. You can make early judgments about the professional/company based on how quickly they responded, the tone they use and how helpful  the seem to be.

Short-list the Candidates and set up Interviews

As soon as you’ve narrowed your selection, it’s time to set up interviews. It’s best to see similar professions close together. For example, if you’re going to interview three brokers, try and see them all over a day or two.

Create a Beauty Parade Question Sheet

Going on gut instinct isn’t always the best way to do things! With a score sheet you can ensure that you ask each profession the same question and can then compare answers. For example, you’ll want to ask each Broker questions like:

  • What were the last 5- 10 deals that you successfully completed?
  • Who, specifically, facilitated those deals? And will they be helping me?
  • Can you give an example of helping a business similar to mine (either in size, market, overall objective)?

And ask the Solicitors questions like:

  • What is your suggested sale process steps and approximate timescales?
  • For each individual and as a business, how many other deals do you normally work on at the same time and what stage are those deals at?
  • Based on what you already know about my business, can you point out some strong versus weak points concerning the business sale process (in other words, what’s going for you and what’s going against you?)

Create a Beauty Parade Score Sheet

In addition to asking each profession your questions, you can also create an overall score sheet that holds items like, “Did you get on well or was there a clash of personalities?” or “Did you like/dislike any of the team?”

Decision Time!

After all the interviews, tally up your score sheets and determine what professional seems best for your situation.

Make your Life much, much Easier

If the concept of how to stage a beauty parade makes sense to you but you’re overwhelmed by the various steps, let us help you out. We’ve created a 45 page pack called, ‘The Seller’s Professional Advisors Beauty Parade Pack.’ The pack outlines exactly what you need to write in the briefing email, how to short-list the candidates, over 20 questions each for each profession on key questions to ask, a beauty parade score sheet in addition to the process necessary to retain the professionals.

Don’t have the headache we had going through this process with little help, use this pack to ensure you get the best professionals possible!

Kim Brown, Co-Founder of Business Wand, helps business owners navigate their way through the start to finish process of selling a business. Her specialty is to help owners cut costs and increase profits prior to sale. To understand how you can sell your business quickly for the highest sales price, purchase the book, “How To Sell A Business: The #1 guide to maximising your company value and achieving a quick business sale”

 

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How to select a business broker

Select a Business Broker – What to look for

Selecting a business broker is easy, selecting the right one should be another key element in your business sale strategy. Business brokers are usually highly experienced executives who have made a career out of selling other people’s businesses. When you have made up your mind to sell your business, your broker will help you go through every stage of the sale process by advising you and preparing the sale documents.

There can be many ways to find good business brokers. The Internet is the most obvious resource, using which you can look for business brokers in your area. Referrals from friends, partners and family members who have had an experience of selling their business are another important resource for finding a good business broker. You can also advertise your requirements for a broker online or through newspapers.

Remember, that it will be you who would be paying the brokerage fees, and your buyer will not share that burden with you. Apart from looking at the qualifications, certifications, experience, and client feedback of your potential broker, you should also pay close attention to the fee schedule and the terms and conditions of your contract agreement that you will be signing with your advisor. Get our The Seller’s Professional Advisors Beauty Parade Pack for more details.

Look at Broker Qualifications

Poor economic conditions have given rise to scams and misrepresentation. You should be doubly sure that the broker you are hiring has the right qualifications and has the legal permissions to represent you for business sale. You should ask any prospect brokers whether they are certified business intermediaries and hold the documents to that effect. A good broker would probably also be a member of International Business Brokers Association and/or other broker associations in different countries and industries.

Look at Broker Experience

Don’t hesitate to ask the business broker in detail about their previous experience and similar cases that they have handles in the past. Ask for references and verify the broker credentials with previous customers before you sign the contract.

Look at Broker Commitment

Even an outstanding business broker is worth nothing for you if that broker does not keep your sale at the top priority. The commitment can be determined by the amount of time a broker devotes to your case, and the amount of workload that a broker has. If a broker is already engaged in bigger deals, the chances are that you will be treated as a second-rate customer. On the other hand, a broker who is without a job might not be a great broker to hire. However, you should not accept anything less than 100 per cent when it comes to attention and commitment from the broker. Make your demand known to your prospect broker, so that your job is taken more seriously.

Look at Broker Fees

The broker fee is usually in the form of a percentage of the sale figure. However, brokers would almost always demand some expenses to be paid up front. While the standard commission is around 10 per cent, many brokers build a lot of hidden charges in their fee schedules, like document preparation fees, consultancy charges and the like. When your potential broker presents you the fee schedule, make sure you thrash every detail and leave nothing hidden in the small print.

Look at Broker Pricing Methods

A professional business broker will determine the price of your business and will guide you about the price that you should demand. You should know what methods your broker uses for estimating the price of your business. Scrutinise the broker’s past performance with a focus on the price demanded and the price realised for previous sales.

Look at Other Credentials

Every credible company has a website these days; your broker should have one too. The broker should be easily accessible and willing to help you with every detail of the sale. It is very important that you talk to business owners who have hired that same broker in the past. By working a little harder while hiring a business broker, you’ll be saving yourself a lot of hassle later. If the broker is incompetent or not committed, you run the risk of selling your business cheap or losing the sale altogether. Make sure that your broker hasn’t been sued and is under no current litigation by any buyer or seller.

Signing the Contract

Most of the brokers will want you to give them exclusive representation. Once you sign the agreement, you wouldn’t be able to engage any other party or broker for the sale of your business for a certain period. This period could be six months more. However, if you have a personal approach to some buyer or are already negotiating the sale with a partner or friend, you may include an exception in the contract in consultation with your broker. Make sure that the contract is concluded as the sale takes place, and there are no outstanding or long term liabilities against you.
Many brokers will also be willing to help you prepare the documents for a business sale without requiring you to sign up and get listed with them. They would complete your paperwork for a fixed charge, and you can decide to retain the later for the conclusion of the sale. It would really depend upon whether you have a buyer already interested. If you don’t have a clue about who will buy your business, it is advisable to go ahead with a seasoned broker.

Joanna Miller helps business owners navigate their way through the start to finish process of selling a business.  Her specialty is helping owners understand how to prepare and make the most of their business sale process to maximise their company’s value. To understand how you can sell your business quickly for the highest sales price, purchase her book, “How To Sell A Business: The #1 guide to maximising your company value and achieving a quick business sale”

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How to find the best Solicitor to sell your business

Before Engaging, find the best Solicitor ever

solicitorsFind the best solicitor you can to help you sell your business and guide you through the business sale process. If you already have a good solicitor, consider yourself lucky. Completing a business sale is a job that requires exposure to all functions of business as well as understanding the legal terms and law. Choosing a solicitor should be at the top of your list when you are committed to sell a business.

Not all businesses would require a solicitor to sell, though. If you are selling a website, you can easily find a buyer online and complete the transaction through a form of escrow. However, having a solicitor go into bat for you can help a business’s valuation and increase the multiple. Poor solicitors can wreck the sale altogether. We would hate to see that happen to you so here are a few tips that you may consider before signing up with a solicitor that go hand-in-hand with our pack that helps you beauty parade all your professional advisors.

Competency and Experience

You should be very careful while choosing a solicitor. Your solicitor will not only draw the Memorandum of Information, Heads of Terms, and other sale documents, but also help you during the negotiations. Unless you own a famous brand, the price your business sale fetches would largely depend upon how your solicitor presents your business in the Memorandum. It is, therefore, extremely important that your business sale solicitor has lots of experience in selling businesses and is fully competent in preparing all documents related to the business sale. Your solicitor should have a proven track record in selling businesses similar to yours, and should preferably be recommended by someone you know.

Understanding of Your Business and Industry

Every industry and business has some quirky requirements which the solicitor must be aware of before drafting the sale documents especially if those quirky requirements affects your business, and in turn, your business’s valuation. The solicitor is there to safeguard your business’ purchase price and make sure that the buyer cannot claim back against any indemnities or warranties from you in the future.

Fee Structure

Solicitor fees and commissions can vary widely. Some of the solicitors that you come across might have hidden charges in their fee structures, which might surprise you at a later stage. If you don’t want to be caught unaware and pay heavily, you should thrash out the details of the fees and other charges with your solicitor before signing up and look out for % fees and financial penalties upon contract termination.

Terms of Engagement

The agreement you sign with the solicitor will document each and every detail, including the rights and responsibilities of both parties, i.e. you and your solicitor. Insert the appropriate timelines, penalty clauses, the payment terms and all other details meticulously. Selling your business is a complex matter. Don’t increase its complexity and difficulty by hiring the wrong solicitor. Spend time review the sale document again and again until all parties are ready to sign it!

Interest in Your Business Sale

A solicitor may have a great record and reputation, but from your point of view, it is the interest and involvement in selling your business that should matter the most. If you sign up with a solicitor who specialises in selling much bigger businesses than yours, that solicitor might not take your job very seriously. Apart from reputation, you should also determine the level of interest that your solicitor is displaying for your particular transaction, and hire the best solicitor who is fully committed to helping you selling your business.

Customer Services

Your business sale solicitors should not be so busy that you have to wait for days before meeting with them. They should have a culture of customer services and should put you at their top priority. They should have a reputation for meeting deadlines, as they would be preparing all the paperwork and should not keep you waiting on that.

Expert Window Dresser

When selling a business, a lot depends upon window dressing in order to earn the maximum amount of money from your business sale. Your solicitor should be fully aware of this vital aspect and should pay proper attention to all beauty parade elements. Selling a business is about delivering the right sales pitch. The basic AIDA approach (Attention, Interest, Detail, and Action) should be followed. The strengths of the business should be highlighted while the weaknesses are window dressed. Only an expert business sale advisor can point you in the right direction.

 

Kim Brown, Co-Founder of Business Wand, helps business owners navigate their way through the start to finish process of selling a business. Her specialty is to help owners cut costs and increase profits prior to sale. To understand how you can sell your business quickly for the highest sales price, purchase the book, “How To Sell A Business: The #1 guide to maximising your company value and achieving a quick business sale”