When selling a business, there is a lot on the line thus lending itself to a stressful situation for most business owners. This is especially the case when you're not familiar with each step of the sale process.
Developed via 35+ years of experience, Transworld Business Advisors has mastered a system for selling a business which provides a complete and seamless experience for both buyers and sellers.
What does the Transworld sale process look like, you ask? We will break it down for you step-by-step!
The Transworld Sale Process in Thirteen Steps
- Signing a Listing Agreement. The listing agreement is a signed contract between the Seller and Broker granting the Broker permission to begin marketing and selling the business in question. The typical terms of this agreement involve the Exclusive Right to Sell (i.e. the seller can only use Transworld for the term of the contract), a 12-month term, the agreed upon commission to the Broker.
- Collect Quantitative and Qualitative Information on the Business. Typical information required to put together a marketing package for the business listing will be collected during the Seller Interview. The Seller Interview will bring to light information such as the business name, location and the history of business. This is also the time to collect documents including financials and a copy of the lease.
- Develop the Advertising and Marketing Campaign. While the Broker continues to support the transaction side of the process, Transworld's Marketing Team will develop a teaser advertisement and executive summary of the business. At this point in time, it is important to point out that all specific identifying information will be kept between Transworld and the Seller. This is important for a few reasons but is mostly to protect the success of the business during this sensitive process.
- Marketing Material Approval. Once the marketing package is complete it will be shared with the Broker and Seller for approval. The Broker will review the materials for accuracy and ensure they convey the business in a way that showcases its positive aspects and unique possibilities. Once the Broker reviews the materials they will be passed along to the Seller. The Seller will always have the final word on the marketing materials before they are published. This is important because Transworld values a positive Seller experience.
- Live Business Listing. The business is now ready for listing. As such it will be listed on both the Transworld of Denver and Transworld's corporate websites. These sites alone will reach a solid, national market of buyers, optimizing the Seller?s opportunity for a successful sale. In addition to company website listings, the business will be featured on trusted listing sites, social media campaigns and other avenues as seen fit and depending on the industry.
- Buyer Inquiry and Initial Phone Call. Following listing, a business will attract a varied number of buyers. Transworld brokers will plan an initial phone call with all potential buyers. The main purpose of this call is to deduce whether the buyer is a good fit with the listing and should move forward in the buying process.
- Non-Disclosure Agreement. After the initial broker call, if the buyer is a good fit for the business the next step is signing a Non-Disclosure Agreement (NDA). This is a critical step in the process as confidentiality is highly valued at Transworld. Once the NDA has been executed the buyer will gain access to the listing's executive summary, providing the prospective buyer with additional key information on the business.
- First Meeting and Financial Qualification. This meeting serves two purposes. It is where the Broker gets a chance to follow up with the Buyer to answer any initial questions they might have in regards to the business. And second, if the buyer is serious, they will complete a Financial Profile to confirm they have the means to purchase the business. At this point, the seller is not involved in the process.
- Second Meeting and Tour. This step marks the start of the involvement of the seller in the process. The second meeting is between the Seller and Buyer and of course the Broker who will be facilitating the process. The meeting often takes place at the office of the Broker or at the location of the business to be sold. This step is an important aspect of the overall process and will speak to whether the buyer and seller interact well and can move forward with the buying and selling transaction. The sale of a business is an important process and requires both sides working together to reach Closing.
- Offer and Negotiations. At this point, the prospective buyer wants to move forward with the purchase and will submit a reasonable offer to the Seller and Broker. This offer will be presented in the form of a Letter of Intent (LOI). The LOI will dictate the price to be paid, important dates for the transaction and any additional contingencies that the transaction will be based upon. It is important to remember that an LOI is not a legally binding contract. It is at its most basic an outline of the pending transaction and its terms.
- Due Diligence. After the LOI has been accepted, both parties will sign the LOI and the transaction will then move into the Due Diligence period. Due diligence involves the free sharing, within reason, of information concerning the business, between the Buyer and Seller. This is inclusive of information such as tax returns, bank statements, asset inventories, operations manuals, employee lists and client concentrations, etc. The goal of this process is for the Buyer to justify the purchase and confirm that this is a viable opportunity for them. If the Buyer is not satisfied with their findings they can withdraw their offer.
- Closing. Closing has been the end goal of this transaction process all along. Just like buying a house, this is where everything is finalized and the transaction is completed. All documentation is signed at this time. Finally, once all documents have been executed the funds are dispersed and the Buyer becomes Owner.
- Transition and Training. After Closing begins the transition period. This key time involves significant knowledge transfer. The new Owner is set up to be fully trained on their acquisition by the previous to ensure they can run their new business. Another common action during this final step is a business wide meeting involving all employees to announce the sale of the business and introduce the new owner.
Transworld's sale process is one that has been honed over time and through many business transactions and while it may seem simple when outlined in a step format, it can become a little complex. But our Brokers work diligently to support the sale process for our Sellers that provides peace of mind and end results. And while supporting the Sellers, our Brokers facilitate a well organized and clear business transaction for our Buyers.
For more information on selling your business through Transworld Business Advisors - Rocky Mountain, please visit our website or schedule a cosnsultation with one of our brokers today!
Matt Prescott is a Certified Business Intermediary with Transworld Business Advisors - Rocky Mountain. After having graduated from the University of Arizona, he initially worked in commercial real estate, later transitioning to sales for a Fortune 300 company based in Chicago. Matt has been working with Transworld since February of 2016 and is knowledgeable in a vast range of business industries. If you are interested in buying or selling a business contact Matt Prescott today!