The ListABiz Guide To Selling A Small Business
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You want to sell your business.

So where do you start?

 

At ListABiz, we can help you reach your goals.

The first step is to post your listing. Your ad will be seen by thousands of potential buyers and clients. You can keep your name, the business name, location, and product line completely private. There is no cost to use ListABiz.

If someone is interested in your business, they will click on the ‘Contact This Seller’ icon on your listing page. At this stage keep it simple; answer their questions, but don’t overload the contact with information. To maximize your chances of a sale at the best price, you also need to showcase your business with both a mini-memorandum-of-sale and a memorandum-of-sale.

Note: in many cases it is best to use a broker to sell your business. They are experienced negotiators; they know how to structure the memorandum-of-sale. A Broker will make the sale process streamlined. The price you attain will likely be higher including their fees.

If a contact seems interested, ask them if they would like to see your mini-memorandum-of-sale. This document itemizes details about your business you are prepared to give to the general public. It will “sell’ your business in the best possible light. It will save you having to answer the same questions over and over again.

Once your ListAbiz contact agrees to see the mini-memorandum-of sale, you have the option of asking them at this time to sign a confidentiality agreement. Be careful asking the potential buyers to sign this type of agreement as it may scare potential buyers away. On the other hand it may also have the effect of filtering out time wasters!

Note: Your attorney should oversee your confidentiality agreement.

A confidentiality agreement is a legal document that ensures the signer is very careful with the information you are supplying. When you mail the confidentiality agreement and the mini-memorandum of sale, be sure to also enclose a cover letter. The cover letter should thank them for their interest in buying your business, and inform them of the importance and privacy of the agreement. At the same time, you may want to ask them for a statement of their background and an indication of their financial resources in order to purchase your business.

Having received the signed confidentiality agreement, you may now supply the full memorandum-of sale document, if the contact asks to see it.

When a potentially ‘hot’ buyer asks for more information about your business, you should not simply email them with dribs and drabs of information. This is your opportunity to ‘sell’ the business by putting it into the best glowing light, controlled by yourself. That is why both the mini and the main memorandum of sale are important selling items.

The Mini-Memorandum may contain:

  • A covering letter thanking them for their interest.
  • Your name, the business name, the business address, contact details, a general description of the main business and about its great location (If applicable).
  • Tell them in general terms the sales of the business over the last 3 years.
  • The earnings of the business in general terms. (Net profit before interest and taxes).
  • If the sales/profit have been trending upwards, say so.
  • State the asking price.
  • Also tell them your reason for selling.
  • If there are opportunities for expansion, outline these. (Optional at this stage).
  • Tell them any details you may be willing to let a competitor know.
  • Ask them to call or email you if they want additional information.

Having received the potential buyers reply, you may now wish to forward the main memorandum-of-sale.

The main Memorandum-of-Sale may contain: 

  • A detailed description of the business, its location, its contact details, how long the business has been in operation. Why your company is successful. Its main product lines. The reason for the sale, plus any other glowing features of the business.
  • The asking price and the terms of sale.
  • How was the price arrived at? Don’t set too high above your reserve. Leave room for negotiation. If you start too high you may lose the potential buyer.
  • Overview of your product lines.
  • Best selling products.
  • Percentage of sales per line.
  • Profit margin for main lines.
  • Description of your industry and where you see it headed.
  • In general terms talk about your major customers. Don’t go into details at this stage.
  • Inform who the major competitors are.
  • Give a full and frank insight into staff.
  • If a building or any major assets/equipment is included, provide a list. Describe each with age and condition. Include photographs.
  • Provide lease/rent details.
  • Provide summaries of least 3 years of financial records. (7 years would be better).

These can be as detailed as you wish. But, you may want to hold back on actual details until later in the negotiation when you know the buyer is serious about the purchase. The more you provide the easier it will be for the buyer to make a decision.

Featured Brokers

Advanced Business Brokerage Virginia, USA

National Business Brokers Consultants Colorado, USA

Pacific M&A And Business Brokers Vancouver, Canada

To become a featured broker see: Featured Advertiser Benefits.

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