By Bianca Evans
Business owners are busy people, so one of the first things they want to know about the selling process is the amount of time they’ll have to put into it. That’s one of the primary reasons to work with an experienced broker: they take on most of the preliminary work, allowing the owner to focus on running the business or franchise.
The highest and best use of the seller’s time after listing is keeping the business running profitably. Some owners, after making the decision to sell, tend to take their foot off the gas, letting the business slow down while they’re seeking a buyer. But the more energy they put into the company, the better their offers and terms will be from prospective buyers.
The broker’s job is to gather sufficient information from the seller upfront so that they can address most questions and requests for information from prospects on their own. That usually means a couple of hours’ worth of discovery calls with the seller, and gathering up the essential financial documentation and information a buyer will want to know. That includes information about customers, products, the company’s workforce, equipment, leases, legal agreements, and more. With this, the broker produces a CIM (Confidential Information Memorandum) that, without revealing the business’s identity, gives prospects enough data to decide about whether the company might be a fit for them.
Your broker will do their best to screen out unqualified buyers – those who don’t have the financial means to consummate a deal – and most tire-kickers. The goal is to present only serious candidates with the financial means and intent to close the deal in a reasonable amount of time.
The number of qualified prospective buyers varies widely with the industry and size of the business, of course. In my experience, if the Seller’s Discretionary Earnings (SDE) is less than $300,000, there will be just a few qualified buyers who express interest. In a much larger company, there may be a couple dozen inquiries to field. Sometimes, when there are a significant number of prospects, the broker will ask for an Indication of Interest letter, a preliminary, non-binding document from a potential buyer. It’s a step beyond a casual expression of interest but less formal and committed than a Letter of Intent (LOI).
Your broker will help manage your time and resources, so you only have to deal directly with serious and qualified prospects. You’ll meet them virtually or by phone so you know you’re a good fit before you schedule an in-person visit to the business. There will inevitably be some back-and-forth communication and requests for clarification during the discovery period, but your broker will make sure you’re only responding to questions that are material to the negotiation process.
Selling your business or franchise is a complex process, but working with an experienced and professional business broker can make the process much quicker, easier, and more stress-free.
About the Author:
Bianca Evans is a Certified Business Broker and Owner of My Florida Business Broker. She has facilitated more than 200 business transactions since 2006 and holds multiple industry designations, including Certified Business Intermediary (CBI), Certified M&A Professional (CM&AP), and Board Certified Intermediary (BCI). Bianca specializes in helping business owners prepare for successful exits through strategic planning, valuation insight, and disciplined deal execution.