Seller’s Frequently Asked Questions

Q:  How long will it take to sell my business?

A:  A number of factors influence the time it will take to sell your business, including the price of your business, terms of financing, and the type of business you are selling. Generally speaking, however, it takes an average of 60 to 180 days to find a buyer for a business. The price and terms you are offering will then become some of the most important influences in expediting the sale. Obviously, the more reasonably priced, and favorable the terms being offered, the faster the sale will close. Other less obvious factors can be even more important to the savvy buyer.  This is where the expertise of your BBC Broker will help you most.

Q:  How will my business be marketed?

A:  First, we prepare a comprehensive prospectus of your business.  This prospectus is only shared with pre-screened buyers under non-disclosure agreement.   We identify and market your business directly to individuals in the same or an interdependent industry.  These Individuals understand your business, its value, and have the knowledge base to best succeed you in it.  Your business is also advertised in the Sunday Classifieds, on the Internet, and in several other business publications. To maintain confidentiality, we run “blind” advertisements which do not include any identifying information about your business. Internet advertising is more and more important. We have the ability to market your business on our site and the most frequently used on-line listing services. This gives your business exposure to a wide range of Internet users.

Q:  If I finance all or part of the sale how will I be protected?  How do I know the Buyer will make payments?

A:  Most of the businesses we sell are financed in whole or part by an SBA Loan.  That means you as the seller will walk away from the closing table with all or most of your “cash in hand.”  If you finance all or part of the sale price,   your financing is secured against the business assets. The closing attorney will prepare three documents, pertinent to the financing agreement; these are the promissory note, a security agreement and a UCC-1 financing statement. The UCC-1 financing statement will be filed with the appropriate local and state agencies. Your lien against the business will be recorded in the public records and the assets listed on the UCC-1 cannot be legally sold or refinanced without your permission.  Moreover, the buyer’s initial investment- their down payment on the business- typically insures their commitment to continue making payments on time.  After all, they do not want to risk losing the business and their investment to foreclosure.

Q:  Will the buyer pledge any additional collateral for my loan?

A:  No. Your business is the only collateral pledged against the loan. When a buyer purchases your business, he or she does so based upon the assumption that this business will generate sufficient cash flow to pay your loan and provide them with enough additional cash flow to meet their needs. Requesting a buyer to pledge additional collateral sends a very negative message to them: specifically that they have paid too much for your business and that you do not expect the business to generate enough cash flow to pay your loan and its other operating expenses.

Q:  What types of offers should I expect to receive?

A:  Ultimately, the final selling price you receive for your business will be the result of what the market- including lending institutions- is willing to bear. For this, and many other reasons, it is  important to consider financing at least some of the acquisition. Businesses that offer seller financing- even in part- bring a significantly higher selling price than those that don’t.

Q:  What type of contingencies are common in a Purchase Agreement?

A:  Standard contingencies include things like; favorable review of the businesses financial statements, obtaining financing, and a satisfactory lease.  All offers that you receive will have some contingencies attached to them. These are the most common, but there may be others specific to your business. Contingencies are a normal part of the sales agreement and provide the buyer with the ability to more thoroughly inspect the business before closing.

Q:  Should I expect to train the buyer?

A:  Yes. The duration of the training period varies anywhere from one week to three months, depending upon the type of business you are selling. Usually, you will be expected to provide one or two weeks of onsite training and an equal length of telephone consultation. Because you still have an investment in the business, properly training the new owners is in your best interest.

Q:  Will I have to sign a Non-compete Agreement?

A:  Yes. Non-compete agreements are standard in any sales contract. They are usually based upon a physical area and time frame in which you agree not to establish another business like the one you are selling. The non-compete agreement may also prevent you from consulting or working for another company in the same line of business within the specified time and distance perimeters. Reasonable non-compete agreements will cover the area from which your current customers are generated and a time period, usually equal to the term of the financing you are providing the buyer. For example, if your customers come from a 15-mile radius of your business and you are offering the buyer a two-year loan, you will be asked to sign a non-compete, specifying that you will not open another like business for a two-year period with a 15-mile radius.

Q:  When should I inform my employees of the sale?

A:  For a number of reasons, it is best not to inform your employees that you are selling your business until after the sale has been closed.

Q:  Will BB&C financially qualify the buyer if I offer financing?

A:  No. We do not run credit reports on buyers, or verify their personal financial statements. However, we will obtain the necessary permissions from the buyer for you to do so.  And we will assist you in obtaining any financial records, such as personal tax returns- as you deem necessary to make your final decision.

Q:  What can I do to help sell my business?

A:  There are some very simple things you can do to help BBC best represent and expedite the sale of your business. Continue business as usual. Maintain normal working hours. Keep inventory levels up. Be sure the business is clean and in good repair. Equipment or furniture that is not part of the sale should be removed. You will also need to provide us with required information in a timely manner, and try to accommodate potential buyers as much as possible when setting appointments.

Do not work directly with potential buyers, as this invariably weakens your footing in the negotiation process. Always refer them back to us. Remember, you hired us to sell your business. So let us do our job and handle all negotiations. A well-negotiated deal is a deal that will close.