BizQuest.com • Selling Your Business for Dummies by Barbara Findlay Schenck (Wiley Publishing, 2009) • The Complete Guide to Selling a Business by Fred S. Steingold (Nolo, 2007)
Hire good advisers
Selling can get complicated, and many
business owners are rookies vying with seasoned buyers. Good advisers might include a
lawyer, a banker, a valuator and an accountant
who can discuss taxes, retirement and other
financial implications and can offer a calming,
reasoned presence. Also, an accredited broker
can help market the business, vet buyers,
structure the sale and perform other duties.
“The biggest mistake sellers make,” says
Symchych, “is trying to do the sale themselves
and not working with professionals.”
Heidi Carpenter, a Costco member and
Eden Prairie, Minnesota, attorney who has
counseled sellers for years, suggests a go-slow
approach in selecting advisers. She especially
recommends patience in choosing small-
business brokers; talk with several who are
knowledgeable about your business.
Some business owners may market the
company through word of mouth, newspaper
ads or industry channels. Others may reach a
broader audience through online markets
and/or working with a broker, says Mike
Handelsman, a Costco member and group
general manager of BizBuySell, an online
business-for-sale marketplace. The San Fran-
cisco firm offers 45,000 businesses for sale
and fields what Handelsman says is North
America’s largest broker directory.
The majority of potential buyers aren’t
qualified, says Handelsman. You can usually
quickly cull candidates with your asking price
and their willingness to supply confidential
information about their financial wherewithal, he says. Pre-screened prospects sign a
nondisclosure agreement involving some—
but not all—aspects of your business.
The aim of a selling memorandum is to
engage prospective buyers with a truthful and
inspiring account of your company. There are
no hard and fast rules, but the document frequently includes an outline of the firm’s history, strengths and uniqueness; several years
of updated financial performance; marketing
materials; a list of key customers, employees
and vendors; and a justification of the asking
price. The level of detail often hinges on the
company’s size and complexity.
“It [a selling memorandum] gives a
snapshot of your business to qualified buyers,” says Symchych. “It’s part marketing and
Letter of intent
A letter of intent vaults the buyer’s interest to another level. The document takes your
business off the market and offers a
potential buyer negotiating exclusivity. Both parties intensify their due
diligence, with the buyer perhaps performing a more
evaluation and on-site inspection.
prospective purchaser to pepper
you with a range
of questions on
everything from growth potential, procedures, and intellectual property and contracts
to pending liabilities, staffing and management capabilities, and customer retention.
“It drives a lot of sellers out of their
minds, because they will get requests for so
many different things,” says Schramski, add-
ing that many deals founder at this stage.
Final negotiations and closing
The parties affix the last tweaks to price,
terms and conditions and sign a purchase and
sale agreement to close the deal. All together,
experts say, the selling process typically takes
from six to 12 months.
After selling his small healthcare company, Tom Schramski confides, it took time to
make the transition.
“But I eventually realized there were a lot of
other things I wanted to do in life,” he says.
“It actually opened up a new world for me.” C
Harvey Meyer writes for a variety of
national business, consumer and general-interest magazines.
AUGUST 2012 ;e Costco Connection 23