This is Chapter 4 of Your Complete Guide to Selling Your Business. Check out our Introduction to the Guide go back to the beginning.
Finding a Buyer
After you have prepared your business for sale and determined its value, you will start looking for a buyer. You may decide that it is a good idea to tell your employees and suppliers that you are planning on selling not only to prevent people panicking about a shotgun sale, but also because you may find a genuine buyer within this group.
Selling a business can be time-consuming and it’s important that you separate the wheat from the chaff. Asking a prospective buyer these questions can help you qualify prospective buyers:
- Do they have any experience running a business?
- Have they worked in the industry before?
- How much are they willing to pay for the business?
- How will they finance the purchase?
Quick Tip: Presenting Your Business For Sale
Don’t underestimate how a clean and well-presented office, retail space or factory/warehouse will affect a potential buyer’s impression of the business. Put yourself in your customer’s shoes and try seeing the business through their eyes to help you highlight the business’ best qualities in the listing. Undertaking a thorough tidy of the business premises is a small task that can make a big difference.
Listing Your Business for Sale
You can cast a wider net by advertising your business online, for example, on Seek Business or Gumtree. A well-structured listing will help attract more enquiries.
What Makes a Good Listing?
Engaging Business Brokers
A business broker can take on much of the work that’s involved with selling a business and help you promote your business and find a buyer. They can also assist with negotiating some of the terms of the sale with a buyer. If you decide to list with a business broker, you should ask them the following questions:
Questions to Ask Before Engaging Business Brokers:
- Do they have experience in selling businesses in your industry? Business brokers typically specialise in a particular industry. Finding a business broker that focuses on your particular industry will mean they have a better understanding of what’s involved in selling your business and their existing buyer database will likely be more suitable for your business.
- How much is the commission? Commission schedules vary among business brokers, so it’s worthwhile shopping around.
- Do they operate on an exclusive basis? Some business brokers require that you list with them exclusively. If your agreement with your business broker is exclusive, and you break this exclusivity, you may still be required to pay your business broker their commission even if they did not sell your business.
- How much is advertising and what kind of advertising do they do? The cost of advertising and promoting your business is often separate to the business broker’s commission. Each business broker uses different forms of promotion. You want to engage a business broker who can get you the best possible coverage.
You know now that you’ll need to list your business for sale and make the listing appealing to potential buyers. You also know you can engage a business broker to sell your business for you. Read on to see what happens when you find a buyer. If you have any questions before you continue reading, you can contact LegalVision’s sale of business lawyers by calling 1300 544 755 or filling out the form on this page.
This chapter was an extract from LegalVision’s Sell Your Business Manual. Download the free 36-page manual featuring the sale process, preparation checklists, and your cheatsheet for negotiating terms.
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