How Changing Market Conditions Can Impact Your Business

Recently, the International Business Brokers Association (IBBA) released its Q2 survey report, The IBBA and M&A Source Market Pulse. This survey features feedback from an impressive 301 brokerage professionals across 44 states with 266 transactions taking place in the quarter. The report had numerous key findings that will be of interest to those looking to buy or sell a business.

The Emergence of Covid-Proof Businesses 

One key fact of interest is that a full 25% of businesses are still operating below capacity due to the pandemic’s enduring impact. The Market Pulse survey concluded that a quarter of all small and medium sized businesses are either in a position where they are temporarily closed or are operating below capacity. On the other side of the equation, the survey noted that 29% of businesses have either emerged as “Covid proof” or have actually benefited from the pandemic. 

For sellers with Covid resistant businesses, now could be an excellent time to sell. For buyers, there are potential deals to be had, especially for those who are willing to look beyond the current pandemic fueled environment and towards the future.

Why are Sellers Selling? 

The report also noted that burnout is a major factor impacting deal activity. Retirement continues to be the leading reason why businesses are selling, but burnout has become a quickly rising secondary reason. 

The top five reasons that sellers are putting their business on the market are: retirement (35%), burnout (27%), health (15%), tax increases (7%) and general Covid fatigue (7%). The pandemic is still likely playing a role in the minds of many business owners who are looking to sell, which means that buyers could find good deals due to the pandemic. It is important for buyers to note that as pandemic conditions improve, many of today’s good deals will likely vanish.

While the IBBA and M&A Source Market Pulse report noted that over the last year it took longer for deals to close in most sections, there were exceptions to that rule. For example, in the $5 million to $50 million sector, there has actually been an acceleration. On average, deals in that range are taking a mere ten months to close. 

Top Buyers in 5 Sectors 

Sellers will be pleased to hear that the report concludes that buyers are indeed active, noting that in the Main Street market, personal services were trending. In the lower middle market, it was manufacturing and construction/engineering that dominated industry transactions. 

The top buyers in the $0 to $500,000 sector were first time buyers (39%), in the $500K to $1MM range, the top buyers were first time buyers (37%), and in the $1MM to $2MM range, entrepreneurs (29%) lead the way. For the $2MM to $5MM range, it was first time buyers (36%) and serial entrepreneurs (28%) who led the way. For the $5MM to $50MM range, PE firms seeking a platform deal (33%) were the most represented group of buyers. It is interesting to note that with the exception of the $5MM to $50MM range, first time buyers topped the list.

Buyers and sellers will be pleased to learn that the IBBA and M&A Source Market Pulse report clearly outlines just how much the climate has changed from 2020 to 2021. Today’s market conditions are different than they were a year ago. If you’re looking to purchase a business, you can still find great deals. Those looking to sell should find increased interest from an array of buyers, especially first-time buyers.

Copyright: Business Brokerage Press, Inc.

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Market Trends Highlighted in the IBBA and M&A Source Market Pulse Survey: Insights from the Second Quarter of 2024

The business landscape is in a constant state of flux, shaped by economic forces, consumer behavior, and global events. For business owners, investors, and advisors, staying informed about these changes is crucial for making informed decisions. Since its inception in 2012, the IBBA (International Business Brokers Association) and M&A Source Market Pulse Survey has been an invaluable resource in this regard. The survey provides a detailed look at the trends affecting business sales, particularly in the Main Street (businesses valued between $0-$2 million) and lower middle market (businesses valued between $2 million-$50 million) sectors.

The second quarter of 2024 has been particularly revealing, showcasing significant shifts in the market that have implications for both buyers and sellers. This article will delve into the key findings of the Q2 2024 Market Pulse Survey, exploring what these trends mean for those involved in the business sale process.

The Purpose and Importance of the Market Pulse Survey

The IBBA and M&A Source Market Pulse Survey was created with the goal of providing clarity in a marketplace that can often be unpredictable and challenging to navigate. By gathering and analyzing data from business brokers, intermediaries, and other professionals across the industry, the survey offers a comprehensive view of current market conditions. This information is invaluable for business owners considering selling their companies, as well as for buyers looking to make strategic acquisitions.

One of the survey’s primary strengths is its ability to segment the market into distinct categories, particularly the Main Street and lower middle market. This segmentation allows for more targeted insights, helping stakeholders understand how trends impact different types of businesses.

Key Findings from the Second Quarter of 2024

The Q2 2024 Market Pulse Survey has revealed several key trends that are shaping the business sale market. These trends reflect broader economic conditions, as well as shifts in buyer and seller behavior. Understanding these trends is essential for anyone involved in the market, whether they are looking to buy, sell, or advise on business transactions.

1. Continued Dominance of the Seller’s Market

One of the most prominent trends in the Q2 2024 survey is the continued strength of the seller’s market. This trend, which began to take hold in 2021 and has persisted through the intervening years, shows no signs of slowing down. Sellers are finding themselves in a favorable position, with increased demand for businesses across various sectors.

Factors Driving the Seller’s Market:

• High Demand from Buyers: There is a significant amount of capital in the market, with private equity groups, strategic buyers, and individual investors all competing for acquisition opportunities. This competition has driven up valuations, allowing sellers to command higher prices for their businesses.
• Scarcity of Quality Businesses: Despite the high demand, there is a relative scarcity of high-quality businesses available for sale. This has created a situation where buyers are willing to pay a premium for businesses that demonstrate strong financial performance and growth potential.
• Economic Stability: The broader economic environment in 2024 has been relatively stable, with low interest rates and steady economic growth. This stability has encouraged buyers to move forward with acquisitions, further fueling the seller’s market.

For sellers, this environment presents an excellent opportunity to achieve favorable sale terms. However, it also means that buyers need to be more strategic in their approach, as competition for desirable businesses is intense.

2. Shifts in Buyer Preferences and Strategies

While the seller’s market remains strong, the Q2 2024 survey also highlights some important shifts in buyer behavior. These changes reflect broader trends in the economy and the evolving priorities of different types of buyers.

Key Shifts in Buyer Behavior:

• Increased Interest in Resilient Industries: Buyers are increasingly focusing on industries that have demonstrated resilience in the face of economic challenges. Sectors such as healthcare, technology, and essential services have seen a surge in interest, as they are perceived as safer bets in uncertain times.
• Strategic Acquisitions Over Organic Growth: Many buyers, particularly private equity firms and larger corporations, are prioritizing acquisitions as a way to achieve growth. This strategy allows them to bypass the challenges of organic growth, such as hiring talent and building market share from scratch. Instead, they can acquire businesses that already have established customer bases, skilled employees, and proven revenue streams.
• Focus on Operational Efficiency: Another trend among buyers is a focus on businesses that have streamlined operations and efficient processes. Buyers are looking for companies that can be easily integrated into their existing operations or that offer opportunities for cost synergies.

These shifts in buyer behavior suggest that the market is becoming more selective, with buyers focusing on businesses that offer stability, growth potential, and operational efficiency.

3. The Impact of Labor Market Conditions

Labor market conditions have also played a significant role in shaping the business sale market in 2024. The ongoing challenges in attracting and retaining talent have influenced both buyer and seller decisions.

Labor Market Trends:

• Talent Acquisition Through M&A: One of the key reasons buyers are opting for acquisitions rather than organic growth is the difficulty in attracting talent. By acquiring a business, buyers can gain access to a skilled workforce, which is particularly valuable in industries with labor shortages.
• Retention Strategies for Sellers: For sellers, the ability to retain key employees during the transition period has become a critical factor in closing deals. Buyers are often willing to pay a premium for businesses that have low employee turnover and strong retention strategies in place.
• Wage Inflation and Its Effects: Wage inflation has also impacted the market, with rising labor costs affecting business valuations. Sellers in industries with significant labor costs need to carefully consider how wage inflation will impact their financial performance and, by extension, their sale price.

The labor market will continue to be a key factor in the business sale process, influencing both valuations and the attractiveness of certain businesses to buyers.

4. Private Equity’s Growing Influence

Private equity (PE) firms have become increasingly influential in the business sale market, particularly in the lower middle market segment. The Q2 2024 survey highlights the growing role of PE firms as both buyers and sellers.

Private Equity Trends:

• Aggressive Acquisition Strategies: PE firms are actively seeking acquisition opportunities, driven by the need to deploy capital and generate returns for their investors. They are particularly interested in businesses that offer opportunities for growth through add-on acquisitions or operational improvements.
• Exit Strategies for PE-Backed Companies: On the sell-side, PE firms are also looking to exit their investments, often through secondary buyouts or sales to strategic buyers. This has added to the supply of businesses on the market, particularly in the lower middle market.
• Focus on Value Creation: PE firms are increasingly focused on value creation strategies, such as improving operational efficiency, expanding product lines, or entering new markets. This focus on value creation makes PE-backed businesses attractive to buyers, as they often come with a clear growth plan.

For business owners considering a sale, the involvement of PE firms in the market presents both opportunities and challenges. While PE firms can be attractive buyers due to their resources and expertise, they also tend to be highly sophisticated negotiators, which can make the sale process more complex.

The Role of Professional Advisors in Navigating the Market

Given the complexity of the current market environment, the role of professional advisors has never been more critical. Business brokers, M&A advisors, and other professionals play a key role in helping business owners navigate the sale process and achieve the best possible outcome.

Key Benefits of Working with Advisors:

• Market Insights: Professional advisors have access to the latest market data and trends, which allows them to provide valuable insights into the current state of the market. This information is crucial for setting realistic expectations and making informed decisions.
• Valuation Expertise: Determining the right valuation for a business is a complex process that requires a deep understanding of market conditions, financial performance, and industry trends. Advisors can help business owners arrive at a fair and accurate valuation, ensuring that they do not leave money on the table.
• Negotiation Support: The negotiation process can be one of the most challenging aspects of selling a business. Advisors can help navigate these discussions, ensuring that their clients’ interests are protected and that the terms of the sale are favorable.
• Managing the Sale Process: Selling a business is a time-consuming and complex process that involves multiple steps, from preparing the business for sale to closing the deal. Advisors can manage this process, allowing business owners to focus on running their business while the sale is underway.

In the current market environment, working with experienced advisors is essential for achieving a successful sale. Their expertise can help business owners navigate the complexities of the market and ensure that they achieve the best possible outcome.

Looking Ahead: What to Expect in the Remainder of 2024

As we look ahead to the remainder of 2024, several trends are likely to continue shaping the business sale market. Understanding these trends can help business owners and buyers prepare for what lies ahead.

Predicted Trends:

• Continued Seller’s Market: The seller’s market is expected to persist, driven by high demand and limited supply. However, as more businesses come to market, particularly from retiring baby boomers, there may be a gradual shift towards a more balanced market.
• Increased M&A Activity in Resilient Sectors: Industries that have demonstrated resilience, such as healthcare, technology, and essential services, will likely continue to see high levels of M&A activity. Buyers will focus on acquiring businesses in these sectors to mitigate risk and capitalize on growth opportunities.
• The Role of Technology in Business Sales: Technology will continue to play a significant role in the business sale process, from digital marketing and online deal platforms to data analytics and artificial intelligence. These tools can help streamline the sale process and provide valuable insights for buyers and sellers alike.
• ESG Considerations: Environmental, social, and governance (ESG) factors are becoming increasingly important in business transactions. Buyers are placing greater emphasis on acquiring businesses that align with their ESG goals, which could impact valuations and the attractiveness of certain businesses.

By staying informed about these trends and working with experienced advisors, business owners and buyers can navigate the challenges of the market and achieve their goals.

Conclusion

The second quarter of 2024 has been a dynamic period for the business sale market, with significant trends that have implications for both buyers and sellers. The continued strength of the seller’s market, shifts in buyer behavior, the impact of labor market conditions, and the growing influence of private equity are all shaping the landscape in important ways.

For business owners considering a sale, now is an opportune time to capitalize on favorable market conditions. However, it is essential to approach the sale process with careful planning, informed decision-making, and the support of experienced advisors.

As the market continues to evolve, staying informed about the latest trends and working with professionals who understand the complexities of the market will be key to achieving a successful outcome. Whether you are a buyer looking to make a strategic acquisition or a seller planning your exit, the insights provided by the IBBA and M&A Source Market Pulse Survey will be invaluable in guiding your decisions and helping you achieve your goals in the dynamic business sale market of 2024.

Article written by Sara Vaziri, MBA, MSc, CBB, CBI

The 5 Must-Do’s When Considering Buying Any Business

There is no doubt that buying a business can be a very exciting idea; however, it is critical that prospective buyers don’t lose track of what is truly important. Let’s explore the five most important steps that any buyer needs to take when evaluating a business. The simple fact is that as a buyer, you have no choice but to look beyond the sizzle and work to find the steak. In other words, it’s essential to determine the true worth of a given business.

#1 – Evaluate What is Actually Being Sold

No buyer should assume that he or she understands everything that is, or is not, being sold when buying a business. One of the most important tasks for any buyer is to carefully evaluate the business under consideration and invest the time to understand what the business does and what is included in the sale. This is a task that your Business Broker or M&A Advisor will perform as well. 

#2 – Understand Business Performance

Understanding the performance of a business can be more complex than it initially appears. On one hand, the numbers don’t lie, and it is possible to quickly evaluate the bottom line. 

However, in the process of evaluating the business, you and your Business Broker or M&A Advisor might discover that there are many flexible factors that could quickly alter how well the business performs. For example, you’ll want to take into account the number of hours the current business owner is working and if key employees are contributing enough to the business. These are just two of a wide variety of factors that could influence overall performance.

#3 – Look at the Financials

Ultimately, there is no replacement for understanding the current financials of a business. Perhaps a business has all the potential in the world, and you can easily see that potential. However, remember that almost all buyers must obtain financing; this means that it is usually critical that the business has strong financials in its current state. Before considering any business, you and your team of professionals will want to carefully evaluate profit and loss statements, tax returns, balance sheets, and other important financial documents.

#4 – Evaluate the Business Plan

Understanding the current owner’s goals and what steps they’ve outlined to achieve those goals is a key step. As a new owner, you’ll want to know that there is a path forward for growing your business, and a business plan is essential for achieving that goal.

#5 – Look at the Demographics

One of the single best ways to grow your business is to understand your customers. For this reason, it is important that you have a clear understanding of the demographics of the business and why customers should remain loyal. If there are challenges on the horizon, such as an expanding competitor or new competitor entering the arena, then you’ll want to know this information as well.

Evaluating a business is not a simple process. Working closely with a brokerage professional who has years of experience in evaluating all types of businesses is essential. This is an excellent first step towards buying the right business for your needs.

Copyright: Business Brokerage Press, Inc.

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Important Considerations for Selling Your Business to a Family Member: A Comprehensive Guide

Every business owner eventually faces the inevitable decision of passing on their business. Whether it’s due to retirement, the desire for a new venture, or other personal reasons, the transition of ownership is a critical process that requires careful planning and thoughtful consideration. One of the most complex, yet potentially rewarding, ways to handle this transition is by selling your business to a family member. This approach carries its own set of unique challenges and opportunities, making it essential to navigate the process with care and professional guidance.

This comprehensive guide will explore the important points you need to consider when selling your business to a family member. By understanding the key factors involved, you can ensure a smooth transition that benefits both you and your loved ones.

1. Early Planning and Open Communication

One of the most crucial steps in selling your business to a family member is starting the planning process early. This not only gives you ample time to consider all aspects of the sale but also allows you to have open and honest communication with your family members about your intentions and expectations.

Key Steps in Early Planning:

• Initiate Conversations Early: Discuss your plans with your family members well in advance. This gives everyone time to consider their roles and responsibilities and allows for any potential concerns to be addressed upfront.
• Set Clear Expectations: Clearly define your expectations regarding the future of the business, including your role (if any) after the sale, the financial terms, and how the transition will impact family dynamics.
• Involve Key Family Members: If multiple family members are involved, ensure that everyone who has a stake in the business is part of the discussion. This helps prevent misunderstandings and ensures that all voices are heard.

Starting the conversation early can also help mitigate potential conflicts and pave the way for a successful transition that aligns with both your goals and those of your family members.

2. Understanding the Tax Implications

One of the significant advantages of selling a business to a family member is the potential tax benefits. However, these benefits come with specific rules and considerations that must be carefully navigated to avoid unexpected tax liabilities.

Key Tax Considerations:

• Gift vs. Sale: When selling your business to a family member, the transaction may be treated as a gift by the IRS, especially if the sale price is below the fair market value. This can have significant tax implications, including gift taxes and the impact on your lifetime gift tax exemption.
• Estate Planning: Transferring your business as part of your estate planning strategy can help minimize estate taxes. However, it’s essential to work with a tax professional to structure the transfer in a way that maximizes the tax benefits while complying with IRS regulations.
• Capital Gains Tax: If the business is sold rather than gifted, you may be subject to capital gains tax on the difference between the sale price and your original cost basis in the business. It’s important to factor this into the financial planning of the sale.

Consulting with a tax advisor who specializes in business transactions and estate planning can help you navigate these complex tax issues and ensure that the transaction is structured in the most tax-efficient manner possible.

3. Seller Financing and Payment Options

Seller financing is a common practice in family business transfers, as it allows the buyer (your family member) to purchase the business without the need for large upfront payments or external financing. This option can be beneficial for both parties, providing flexibility in payment terms and ensuring a steady income stream for you after the sale.

Seller Financing Considerations:

• Private Annuities: A private annuity is a financial arrangement where you receive regular payments over time from the buyer in exchange for the business. This can be an attractive option if you prefer a long-term income stream rather than a lump sum payment.
• Promissory Notes: A promissory note is a legal document that outlines the terms of the seller financing, including the repayment schedule, interest rate, and any collateral. It’s important to work with a legal professional to draft a promissory note that protects your interests.
• Down Payments and Interest Rates: Negotiating a reasonable down payment and interest rate is crucial to ensuring that the financing arrangement is fair and sustainable for both parties.

Seller financing can help make the business more affordable for your family member while providing you with ongoing financial security. However, it’s essential to carefully consider the terms and ensure that they are clearly documented in a legally binding agreement.

4. Establishing a Buy-Sell Agreement

Even when selling your business to a trusted family member, it’s essential to have a formal buy-sell agreement in place. This legal document outlines the terms of the sale and helps prevent potential disputes by clearly defining each party’s rights and responsibilities.

Key Components of a Buy-Sell Agreement:

• Business Valuation: The buy-sell agreement should include a clear method for determining the value of the business. This can be done through an independent appraisal or by using a pre-agreed formula.
• Payment Terms: Clearly outline the payment structure, including any down payments, installment payments, and the timeline for full payment.
• Roles and Responsibilities: Define the roles and responsibilities of each party after the sale. This includes specifying whether you will continue to be involved in the business and to what extent.
• Dispute Resolution: Include a dispute resolution clause that outlines how any disagreements will be handled. This can help prevent conflicts from escalating and provide a clear path for resolving issues.

A well-drafted buy-sell agreement is crucial for protecting both you and your family member’s interests and ensuring a smooth transition of ownership.

5. Valuing the Business Fairly

Determining the fair market value of your business is one of the most critical steps in the selling process. This ensures that the sale is conducted at a price that is fair to both you and your family member, and it helps prevent potential conflicts over the sale price.

Valuation Methods:

• Asset-Based Valuation: This method calculates the value of the business based on its assets, including equipment, inventory, and real estate. It’s commonly used for businesses with significant tangible assets.
• Income-Based Valuation: This approach values the business based on its ability to generate income. It involves calculating the business’s earnings before interest, taxes, depreciation, and amortization (EBITDA) and applying a multiplier based on industry standards.
• Market-Based Valuation: This method compares the business to similar businesses that have recently been sold. It’s useful for determining the value based on current market conditions.

Working with a professional business appraiser can help ensure that the valuation is accurate and unbiased, providing a solid foundation for the sale.

6. Navigating Family Dynamics

Selling a business to a family member can be emotionally challenging, as it involves balancing business decisions with family relationships. It’s important to address potential family dynamics that could impact the sale and take steps to manage these relationships effectively.

Managing Family Relationships:

• Clear Communication: Maintain open and honest communication with all family members involved in the sale. This helps prevent misunderstandings and ensures that everyone is on the same page.
• Set Boundaries: Clearly define the boundaries between family and business. This includes establishing professional roles and responsibilities and avoiding favoritism.
• Seek Mediation if Necessary: If conflicts arise, consider seeking mediation from a neutral third party. This can help resolve disputes and maintain family harmony.

Navigating family dynamics requires sensitivity and a proactive approach to ensure that the sale process does not strain family relationships.

7. Preparing for Post-Sale Involvement

Deciding on your level of involvement in the business after the sale is a critical consideration. Some business owners choose to stay involved in a limited capacity, such as serving as an advisor or mentor, while others prefer to step away entirely.

Post-Sale Roles:

• Advisory Role: If you choose to stay involved, consider taking on an advisory role where you provide guidance and support without being directly involved in day-to-day operations. This can be beneficial for your family member as they transition into their new role.
• Consulting Agreement: A consulting agreement can formalize your advisory role and outline the terms of your involvement, including compensation, hours, and responsibilities.
• Exit Strategy: If you prefer to fully retire, develop a clear exit strategy that outlines the timeline for your departure and any final responsibilities you will handle.

Preparing for your post-sale involvement ensures a smooth transition and helps your family member feel confident in their new role.

8. Working with Professional Advisors

Selling a business is a complex process that requires expertise in various areas, including legal, financial, and tax matters. Working with professional advisors can help you navigate these complexities and ensure that the sale is conducted smoothly and efficiently.

Key Advisors to Consult:

• Business Broker or M&A Advisor: These professionals specialize in buying and selling businesses and can help you find the right buyer, negotiate terms, and manage the sale process.
• Attorney: A business attorney can assist with drafting and reviewing legal documents, ensuring that the sale complies with all applicable laws and regulations.
• Accountant or Tax Advisor: An accountant or tax advisor can help you understand the tax implications of the sale and develop strategies to minimize tax liabilities.
• Financial Planner: A financial planner can assist with planning for your post-sale financial future, including retirement planning and investment strategies.

By assembling a team of experienced professionals, you can ensure that every aspect of the sale is handled with expertise and care.

9. Handling the Transition Process

The transition of ownership is a critical phase in the sale process. It involves transferring knowledge, responsibilities, and relationships to your family member to ensure the continued success of the business.

Transition Planning:

• Knowledge Transfer: Develop a plan for transferring your knowledge and experience to your family member. This may include training sessions, documentation of processes, and ongoing mentorship.
• Employee Communication: Communicate the transition plan to employees and reassure them of the business’s continuity. Address any concerns and provide support to help them adjust to the new ownership.
• Customer and Vendor Relationships: Work with your family member to maintain strong relationships with key customers and vendors. Introduce your family member to these stakeholders and facilitate a smooth handover.

A well-executed transition plan helps ensure that the business continues to thrive under new ownership and minimizes disruption to operations.

10. Preparing for the Emotional Impact

Selling a business that you’ve built over many years can be an emotional experience. It’s important to prepare for the emotional impact of the sale and to seek support if needed.

Coping with the Emotional Transition:

• Acknowledge Your Feelings: Recognize that it’s natural to have mixed emotions about selling your business. Take the time to reflect on your achievements and what the business has meant to you.
• Seek Support: Talk to friends, family, or a counselor about your feelings. Sharing your thoughts and concerns can help you process the emotional aspects of the sale.
• Focus on the Future: Shift your focus to the opportunities that lie ahead, whether it’s retirement, pursuing new interests, or spending more time with family.

By acknowledging and addressing the emotional impact of the sale, you can navigate this transition with greater ease and confidence.

Conclusion

Selling your business to a family member is a significant decision that requires careful consideration, planning, and professional guidance. By addressing the key points outlined in this guide, you can ensure a smooth and successful transition that benefits both you and your family member.

From understanding the tax implications and establishing a fair valuation to navigating family dynamics and planning for post-sale involvement, each step of the process plays a crucial role in achieving a positive outcome. By starting the conversation early and working with experienced advisors, you can create a transition plan that honors your legacy while setting your family member up for success.

Ultimately, selling your business to a family member can be a rewarding experience that keeps the business in the family and ensures its continued success for years to come.

Article written by Sara Vaziri, MBA, MSc, CBB, CBI

How to Circumvent Three Legal Mistakes Sellers Make

After decades of hard work, selling your business can be an exciting and rewarding time. Yet, many business owners overlook the importance of focusing on the legal matters associated with sales. In this article, we’ll explore three of the most significant mistakes sellers make. 

1. Use an NDA

The first critical mistake that business owners should be guarding against is skipping the use of a non-disclosure agreement. Simply stated, a business owner should always make sure that a non-disclosure agreement is in place before disclosing to any buyers that a business is on the market.

NDA’s stand as an invaluable way to restrict who does and does not know your business is for sale. After all, the last thing any business owner looking to sell his or her business wants is for competitors or employees to learn confidential information. 

2. Hire an Attorney

The second critical mistake that many business owners make is they skip working with an attorney. There is no way around the fact that if you are selling a business, or for that matter anything of significant value, you need to work with a lawyer experienced in the area of sales. 

Business owners become accustomed to doing a great many things themselves and learning on the job. There is no doubt that this is a personality trait that has served them well over the years. However, when it comes time to sell your business, there is zero room for “on the job training” or relying on your own instincts. One of the best ways that you as a business owner can protect your future is to work with a lawyer when selling your business. In fact, a Business Broker or M&A Advisor can be a vital resource for helping you to find a proven lawyer with a background in the buying and selling of businesses. 

3. Get a Letter of Intent

A third significant mistake that business owners frequently make when selling their business is that they fail to get a letter of intent. Much like an NDA, a letter of intent is a key legal document in the process of selling a business. All too often business owners will skip requesting a letter of intent out of fear of slowing down the process and potentially disrupting a deal. 

The letter of intent is designed to both clearly spell out expectations, while simultaneously protecting your interests as a business owner. When a buyer signs a letter of intent, it indicates that he or she is taking the process seriously. This will protect you from wasting your time. 

The process of buying or selling a business is complex in many different ways. Whether it is dealing with human psychology, organizing your books, thinking about what information prospective buyers are likely to want to see, or addressing a wide array of legal issues, it is a complex and time-consuming process. Working closely with a Business Broker or M&A Advisor is one of the fastest ways that you can increase your chances of a successful sale.

Copyright: Business Brokerage Press, Inc.

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