How long is the legal process?
The time it takes to complete the legal process can vary when selling your business. It depends on the nature of the business and whether there are any complications. On average, you can expect the legal process to take at least six weeks. No matter how long the process, taking the proper legal steps to close the sale of your business is critical and will result in a more successful transaction for both parties.
Can I sell my business if it's losing money?
Although it may seem counterintuitive, there are actually many reasons a buyer may be interested in a failing business. Selling to such a buyer may be a good option for a business owner that is experiencing a downturn.
A buyer might be looking for an investment that has a lower valuation, which he or she can buy at a reduced price and then inject capital or energy into the business to make it profitable. A buyer may also be looking to add a new offering to an existing business by acquiring a company with assets that complement it.
When selling a failing business, it’s important to clear as many outstanding debts and/or legal issues as possible to make it a more attractive offering to potential buyers.
Never count yourself out of a sale. Just make sure you’re honest with potential buyers. Everything will be revealed during due diligence so it's best to be upfront about any issues from the beginning.
Do I need a lawyer to sell my business?
Although you don’t legally have to retain a lawyer to sell your business, it is a good idea to have one involved in the process. Due to the complicated nature of selling a business, you’ll benefit from having the oversight of a professional that understands all of the details. There are a lot of legal contracts that will need to be drafted and reviewed.
A lawyer can help you ensure that any customer, supplier, and employee contracts are up to date. They will also be able to write up a Non-Disclosure Agreement for the potential buyer to sign before the due diligence process, and negotiate and draft the sales agreement. Having a lawyer involved in the sale of your business will help you to protect your interests, and ensure that no details are overlooked.
Do I pay tax if I sell my business?
Yes. As long as you make money on the sale you will be required to pay taxes. The taxable amount will be on the profit, and is called Capital Gains tax. You will pay this tax if you are a sole proprietor or in a business partnership. The maximum Capital Gains tax is 15% for most taxpayers. Limited liability companies pay a Corporation Tax if they make any profit when they sell any business asset, or the business itself.
Do you need a broker to sell a business?
In short, no. However, anyone that is selling a business should consider the pros and cons of working with a business broker. There are several things to consider when doing so. First, it’s important to understand that the sales process can require a lot of your time. If you are very involved with the day-to-day running of your business, hiring a broker to assist with the sale can allow you to maintain more focus on your business.
If you do choose to use a broker, be aware that you will need to pay the broker a commission on the sale. As with any business relationship, the exact broker you use can make a huge difference in the successful sale of your business.
How can I sell my small business fast?
If you need to sell fast, pricing your business right is particularly crucial in order to generate a lot of interest quickly. If your price is too high, it will take longer to find a buyer.
You also need to be ready to entertain serious buyers. That means having all of your documents and financials in order and being well prepared for the due diligence process before your listing goes live.
When it is published, make sure the listing is as attractive as possible. A well-written, nice-looking listing that provides as much information as possible will attract more serious, qualified buyers more quickly.
You may also consider seeking out a similar business or competitor that may be looking to expand its customer base or offerings. Although such a buyer may not want to buy the premises or equipment, he or she may wish to purchase supplier contracts or intellectual property.
How do I market my business for sale?
If you're ready to sell your business, it's important to know how to market a business for sale. The best way to get the attention of serious, qualified buyers is to list your business for sale online, on a reputable site. A business broker can assist you with this process, or list the business on your behalf. They will also be able to advertise your business across established networks where it will get more traction and a larger reach.
Whether advertising online or offline, you will need to include as much information as possible in the advertisement. If a physical business is part of the sale, you’ll also want to include high-quality photos. The more information you can include without giving away sensitive information, the better.
If you’re ready to put your business on the market, BusinessesForSale.com can help. We adhere to the latest SEO best practices to ensure your business gets noticed by buyers.
How do I sell my business privately?
If you want to sell your business privately, it’s a good idea to first reach out to customers and people within your network to identify potential interest. You can also inquire about possible interest from competitors that could benefit from buying your business.
No matter how well you know potential buyers you’re vetting, never share sensitive information without having an NDA in place.
Alternatively, you can list your business on an online marketplace. Doing so will give thousands of potential buyers access to it and increase the chances that anyone searching for a business like yours will see your listing.
How do I valuate and set a price when selling my business?
Setting the price when selling your business is a complex topic because many things impact a business' valuation. The main thing to understand is that you, as the owner, will likely not have the objectivity needed to determine an appropriate or realistic asking price for your business.
Our ValueRight tool is a great way to get an idea of what your business is worth. Once you’ve made a decision to move forward with a sale, the best way to effectively value your business to provide maximum return to you, while not pricing it out of the market, is to retain a professional business valuation service. This could be a business broker, or an experienced commercial accountant. If real estate is part of the sale, you will also want to consult a commercial real estate expert.
How do you value goodwill for a small business?
Goodwill makes up a significant portion of a business' worth, but because it's an intangible factor, assessing its value is difficult.
Your goodwill value will be higher if you have a good standing in the community, you have solid relationships with your customers and suppliers, or you have protected intellectual property that gives you a market advantage.
There are several methods used to calculate goodwill, but the value will ultimately be what someone is willing to pay for your business. A business broker or experienced commercial accountant can help you with this valuation if you are unsure.
How long does it take to sell a business?
The time it takes to sell your business will vary. This will be affected by the type/sector of business and the current market conditions. On average, it takes six to nine months to sell a business. If you are motivated to sell quickly, you can set your price to reflect that, and potentially realize a faster sale.
How will I know when to sell my business?
There is no definitive answer to this. In reality, you may never be 100% certain that the timing is perfect when selling your business. Your motivation for selling will also play a role in timing. If you're uncertain whether or not now is the time to sell, our guide to selling a business can help. This guide walks you through the most important considerations regarding how to know when to sell your business.
How do I sell an existing business?
BusinessesForSale offers many resources to help you better understand how to sell an existing business. Our guide to selling a business outlines every step of the process that you’ll want to consider so you can be confident you are not overlooking anything.
You can also search our library of articles to find selling tips and expertise related to your specific business sector.
Should my accountant sell the business for me?
An accountant is certainly an invaluable part of your team when selling your business. He or she can help you ascertain the value of your business and help you get your financials in order and prepare for the due diligence that will be part of the sale. An accountant can also help you to dial in the details and structure of the sales deal.
But unless the accountant you retain has direct experience in selling businesses, you will still need to work with a business broker or agent to help you find a buyer and facilitate the sale. With your accountant and broker/agent working together, you stand the best chance of attracting buyers, setting your price correctly, and ultimately reaping the best profit on the sale of your business.
What happens to cash when selling a business?
As the seller of the business, you will keep the cash on hand and cash equivalents. Typically, your buyer will acquire accounts receivable so that they can immediately start dealing with customers and get cash flowing into the business. Your buyer will also acquire business assets including the brand itself, and any merchandise and equipment.
What is a disclosure letter?
A disclosure letter is an extremely important document in the sale of any business. As the seller, this is your opportunity to make disclosures against the warranties the buyer will require you to give. Failing to make adequate disclosures puts you at risk for breach of warranty claims. This could result in the buyer recouping some, or all, of the purchase price.
As the seller, the disclosure letter is usually prepared for the buyer by your legal team. There should be as much detail and information as possible in this letter. Providing a high level of detail helps to ensure that your buyer gains a full understanding of each of the matters disclosed.
If you are unsure as to whether something should be included in your disclosure letter, it’s best to err on the side of caution and put it in.
What is an NDA?
An NDA, or non-disclosure agreement is a document that protects you during the due-diligence process when selling your business. Potential buyers will be accessing sensitive financial and other information about you and your business.
Your NDA can cover employee information, product and technology innovations and patents (if applicable), financial information and databases. It’s a good idea to get professional advice when drafting an NDA to ensure nothing is overlooked and all of your information is protected.
Where can I sell my business?
In order to advertise your business to the largest potential buying audience, list it for sale on a reputable online marketplace. BusinessesForSale.com will give thousands of potential buyers’ access to your business listing and increase the chances that anyone searching for a business like yours finds it.
Regardless of the medium you choose to list your business, you’ll want to invest in marketing the listing to make sure it’s being seen by the right people as soon as possible.
Who pays legal fees when selling a business?
In general, the seller is responsible for the bulk of the legal fees. Attorney’s fees will vary based on the size and complexity of the sales transaction. In general, you can expect to pay between 1.5% and 2% of your gross sale proceeds in legal fees.
While this amount may seem substantial, litigating a poorly documented transaction will be far more costly in the long run.
Why use a business broker?
There are many benefits to using a business broker when selling your business. Quality brokers have proven track records, as well as knowledge of the marketplace, databases of prequalified buyers, buyer financing resources, and relationships with other professionals who can assist with the sale of your business.
Working with a broker also allows you to stay focused on running the day-to-day operations of your business while it’s for sale. Your broker can handle the details of listing your business and finding qualified buyers.
It can be tempting to go it alone to save money, but having a professional on your side can be very helpful. When vetting business brokers, be sure to look at those with satisfied clients, and experience selling businesses in your sector, or a similar sector.
How to sell your small business without a broker
You don’t have to have a broker to sell your business. Because they charge a commission, which is typically between 5-10% of the sale price of the business, many small business owners opt not to use a broker. Brokers also require you to sign a contract giving them exclusivity to manage the details of the sale. That means even if you were to find your own buyer, you would still be obligated to pay the broker fee.
The best way to sell your business without a broker is to list it for sale in reputable places, both online and offline. This will ensure your business listing gets the most reach and visibility. BusinessesForSale.com has invested heavily in connecting business sellers and buyers.
You can register for an account with BusinessesForSale.com to list your business on our site. Once your listing is published, buyers can use our 'Search by Sector' feature to drill down through the sectors and categories of businesses for sale. Our 'Advanced Search' feature allows buyers to narrow search criteria by location and price.
Still, it's a good idea to evaluate the potential benefits of using a broker. Because the sales process can require a lot of your time, hiring a broker to assist with the sale can allow you to maintain more focus on running your business during the sale period.
How to sell your small business with a broker
Hiring a broker to sell your business allows you to stay focused on the daily details of running your business while it’s on the market. Your broker will handle all of the details of listing your business and finding qualified buyers.
Working with a quality broker also affords you access to their resources, including knowledge of the marketplace, databases of prequalified buyers, buyer financing resources, and relationships with other professionals who can assist with the sale of your small business.
You can find a broker using Businesses For Sale's service directory.
How do I choose a business broker to sell my business?
When vetting business brokers to hire, be sure to look at those with satisfied clients, and experience selling businesses in your sector, or a similar sector.
Connecting sellers with brokers is one of the many services Businesses For Sale provides. You can also search for brokers through respected business journals and even your local chamber of commerce. You may also rely on referrals from your accountant, financial planner, or attorney.
No matter how you select your broker, keep in mind that he or she will act as a buffer between you and the buyer. Therefore, you’ll want to make sure that the person you choose has a good understanding of your business and your needs and desires from the sale.