It Takes A Team To Sell Your Business
I recently had the opportunity to attend the annual VR Business Brokers (VRBB) Annual Conference, as well as the International Business Brokers Association (IBBA) Annual Conference. After taking some time to reflect on my notes and materials I brought back to my office, I have a much greater appreciation for the various parties that help us get deals to the closing table. This list, not inclusive, includes other business brokers, bankers, transaction attorneys, CPAs/accounts, and many others. Here is a short description of how some of these key players contribute:
Other Business Brokers: Statistically, there is 50% chance that another broker will bring the buyer that eventually buys your business into the deal. It is in everyone’s best interest for all parties involved in getting deals done, whether directly or indirectly, that all brokers seek to establish and maintain a high level of education. Especially when you consider that a business is typically a family’s largest single asset, and that business sales are inherently complex. Some of these complexities include; the size of the deal, establishing a price and the terms of the deal, assignment of a commercial lease, etc.
Bankers: In most instances, sellers want all cash (and a lot of it) for their businesses, and buyers want the sellers to hold sellers’ notes (with as little down as possible). Neither of these scenarios typically take place, so working with quality Small Business Administration (SBA) Lenders is critical in our business. Here at VR, we always work with our lending partners very early in the process to see if they would consider pre-qualifying our deals for SBA Lending with a pre-qualification letter. While this letter doesn’t guarantee that the particular bank will do the deal, as we still need to bring a qualified buyer into the deal, it allows us to market the deal as being lender pre-qualified, and it typically gives prospective buyers a higher lever of comfort when they decide to explore a particular deal in more detail. If the business and the buyer are both strong, a buyer can purchase a business with a down payment of somewhere between 10% and 25% of the purchase price, while the seller gets all of the money due to them at closing.
Transaction Attorneys: In the course of getting our deals to the closing table, there are typically three different attorneys involved in the deal. The seller and buyer typically retain the services of an attorney to help them negotiate the process and paperwork. If either party doesn’t have an attorney, our office has worked with a number of highly qualified transaction attorneys that we feel very comfortable recommending. The third attorney involved serves as the closing attorney. We use a neutral (third party) closing attorney experienced in business sales. The role of this attorney is to implement the decision the seller and buyer have negotiated.
CPAs/Accountants: CPAs and accountants play a very important role for the seller and the buyer. For the seller, they will be key in ensuring that the books and records are in tip top shape and that the business is represented in the best possible way. They will also play an important role in advising the seller about the likely tax liability that they will face with the sale of their business, and they may also be able to provide possible deal structures and/or strategies that may mitigate some of the tax liability. CPAs/Accountants also play a key role in the support of the buyers. Some of the primary ways that they assist buyers may include; due diligence support, setting up of a corporate entity, bookkeeping, payroll, and a number of other possibilities.
Other possible team members may include, but would not be limited to:
401(k) Business Funding Experts – With 401(k) business financing (formerly known as Rollovers of Business Start-Ups (ROBS)), buyers can use funds from an eligible retirement account to buy a small business or franchise without taking a taxable distribution or getting a loan.
Financial Planners – As the sale of a business is often a precursor for retirement, the seller should consult with financial planners, or other similar planners, as to what to do with the proceeds of the sale.
Estate Planners – Many business owners have done extensive estate planning, focusing on their personal assets, but many fail to include their business assets in their estate plan.
Insurance Professional – Insurance professionals can help the seller determine if there are any gaps in their retirement planning that may be mitigated with insurance, and they can also assist the buyer with their insurance needs for the business.
Business Appraiser – Helps set, or validates, the sales price of the business (seller up front and the buyer during the due diligence phase) and can also determine the value for assets within the business.
Navigating one’s way through the sale and purchase of a business is a complex undertaking. Having access to the right team members will help ensure that the process is as smooth as possible. At VR Business Sales we understand the complexities of putting together a deal and strive to foster relationships with teams of professionals who can help. If you are thinking about selling your business, we would welcome the opportunity assist you and your family in reaching your goals through a successful transition out of your business.
One of the Most Active Business Brokerage Firms in Florida VR Business Sales has been the leader in the business brokerage industry for over thirty-five years and consists of approximately 50 independently owned and operated offices worldwide. VR Business Sales located in Tampa/Apollo Beach was founded in 2012 and offers VR’s exceptional brokerage services to the Central Florida market. We represent a wide variety of business owners operating within a wide range of industry segments. Our office consistently ranks within the Top 10 offices in the VR network, and in 2016 we were the #3 office in commissions earned and had the #1 office owner and #3 sales associate. Call us at 813-260-3127 to arrange a meeting.”