So you’ve decided to sell your business. Maybe you’re looking to retire after a long and successful run. Maybe you’re still in the game, but want to move on to the next opportunity. Or maybe business ownership just isn’t for you, and you want to cut ties, recoup your investment, and disentangle yourself as quickly and seamlessly as possible. Whatever the case, there comes a point when every business seller needs to decide if they’re going to go it alone or seek the counsel and services of a business intermediary.
Think about selling a home. For many homeowners, the idea of selling by owner can seem very appealing. No realtor fees, no picky agents coming in and listing off all the things you need to fix before your house is sale-ready (and commission-worthy). Sounds simple, and sometimes it is if the homeowner really knows what they’re doing, has a good lawyer, and is selling in a hot market. But more often, the homeowner is out of their depth and quickly realizes that there’s a lot more involved in selling a home than sticking a FSBO sign in the yard.
This analogy only goes so far because selling a business is orders of magnitude more complicated than selling a home. Prices are higher, stakes are higher, and people’s livelihoods (and your reputation) are on the line. Here are some major things to consider when thinking about selling your business on your own vs. using the services of a business intermediary.
Who’s going to run the business while you’re trying to sell?
Timeframes in business sales need to be thought of in terms of months and years rather than days and weeks (like residential home sales). According to BizBuySell’s 2022 Insight Report, the typical business sale takes 6-months to 1-year to complete, and this has held true for many, many years.
In order to complete a successful sale and maintain your business’s shine for potential buyers, you have to keep it operating at peak performance during the long sale process. Are you really going to be able to do that while also mired in sale-related marketing, networking, valuation and paperwork, paperwork, paperwork?
When you try to sell your business on your own while simultaneously running it, you risk unintended slowdowns and lapses in quality—things you cannot afford when trying to keep your business attractive to buyers. A good business intermediary can relieve nearly all the burden from your shoulders, allowing you to focus on your area of expertise (running your business) while they focus on theirs.
How will you find a buyer?
Listing a business for sale isn’t as simple as listing a house. In the world of business sales, there isn’t one unified listing platform like a real estate-based MLS (Multiple Listing Service). There are a number of listing services, like BizBuySell and businessesforsale.com, but states vary in terms of where and how businesses are listed for sale. And sure, you can absolutely create an account and pop your listing into one of these databases, say little prayer, and wait for the offers to roll in. But you might be waiting a long time.
Good business intermediaries use listing services as simply one tool among many (bad ones pretty much do what I described above and aren’t worth their salt). Experienced and trustworthy business intermediaries have an existing network of contacts that helps them market your business far more effectively than just hitting “submit” on a listing service website. They have relationships with a wide range of potential buyers and ideally are experts on your local market, having been active within the business community for some time. Because of this, they can market your business to a wider, deeper pool, leveraging these relationships and local knowledge to help you find the right buyer for your business. This can be especially important if you are selling a business in a niche industry, as it can be difficult to find the right buyer on your own.
How will you know how much your business is worth?
Coming up with an appropriate list price is one of the most important, yet easily overlooked, aspects of selling your business in a timely manner and at a good return. But many business owners don’t have a proper understanding of how to undertake a valuation, and it’s frequently impossible for them to be objective about the process.
Business intermediaries, while caring very much about their clients, are not emotionally attached to your business, and work through a proven process to determine the MPSP (Most Probable Selling Price). It’s essential to have your business priced right because incorrect pricing is the number one reason that a business will fail to sell. Business intermediaries take a wide range of factors into account when performing a valuation, including management structure, cash flow, debt, physical assets, inventory and real estate—key details that business owners often find hard to quantify.
Can you keep it on the DL?
Most business owners who are thinking about selling don’t want anyone to know about the sale until it’s finalized. You don’t want your competitors, employees or customers knowing ahead of time (and remember, the sale process can take months) because that could negatively impact your business operations. But do you know how to sell your business without letting word slip? How can you market the business to potential buyers without giving away key information? What if a potential buyer can’t keep the information under wraps?
One of the most important functions of a good business intermediary is their ability to successfully market and sell your business while maintaining absolute confidentiality. A good business intermediary will create blind listing advertisements that never mention the name or exact location of your business. Instead, general references are made to the industry, geographic area, and financial performance to entice potential buyers to inquire further. Business intermediaries also require buyers to sign a Non-Disclosure Agreement (NDA), which makes it very clear that the buyer is not permitted to discuss the potential transaction with anyone with exceptions for partners, attorneys, and other financial advisors. Even with a signed NDA, your business intermediary will take great care to ensure that a potential buyer is qualified to buy the business before confidential information is released, including a detailed conversation about the buyer’s experience and financial capability.
Why make the process harder when there’s an easier way?
Is there a better way?
Selling a business is a time-consuming and energy-intensive process. For many, it is the most important transaction of their lives. If you choose to go it alone, you will likely spend countless hours preparing financial records, marketing your business, and communicating with potential buyers, most of whom will be wasting your time having no serious intent of purchasing any business let alone yours. This can be especially challenging if you are trying to run your business at the same time. There is a better way!
By working with a business intermediary, you can be sure that the sale of your business is in safe hands from start to finish. As business owners ourselves, the business intermediaries at Murphy Business Sales of Ohio feel a kinship with business owners of all stripes, and always fight for what’s best for our clients. If you’d like to learn more about how we can assist in the sale of your business, call us at (330) 650-9000 or contact us.
