Business Broker Raleigh, NC - When Selling Your Business!
Selling your business is a serious decision and one that shouldn't be taken lightly. Owners of many of the largest and successful Raleigh businesses trust Transworld Business Advisors to confidently sell their businesses because of our years of experience. Transworld has become the gold standard of the business brokerage world over the last 40 years by selling more businesses each year than anyone.
Our Raleigh business brokers will set a confidential meeting to explain our 12 step process of selling your business. You will see many mid-street and smalled mid-street (under $1 million) businesses in our current listing inventory. Business owners from all sizes of Raleigh businesses trust us to get their businesses sold.
Transworld business brokers understand three important factors when it comes to selling a business:
2. Business Valuation
3. Professional Service
Successful business owners choose our Raleigh business brokers to get their businesses sold. The owners of Raleigh's largest and most profitable businesses choose our 40-year track record and our professional and unique approach to confidentially sell their businesses.
View our active business listings to see why we are considered the gold-standard in the business brokerage industry.
Stats From The BBF
According to the BBF the percentage of listed businesses that actually sale was just over 27 percent in 2018. This number had remained somewhat constant over the last three years. According to the BBF, only 27 percent of listed businesses actually sell.
Business owners will find these numbers alarming. Your Raleigh business should also find these numbers unacceptable. If you are a business owner these numbers tell us that there is a 73% chance that your business will not sell.
These numbers also heighten the role of a professional and qualified business broker. The goal isn't to simply list a business for either the business broker or the business owner. Many business owners fear "telling the truth" regarding business valuations believing that they may not get the listing. Eventually, the business goes to market with an extremely elevated listing price and no buyers are interested.
In 2018, Transworld Business Advisors sold over 1,800 US businesses. Transworld business brokers are trained to TELL THE TRUTH. As a result of their tremendous training, the results speak for themselves.
The Role Of Your Business Broker
A lot goes into the decision of selling or buying a business – A LOT! For many families, it is this decision that captures the essence of the hopes, dreams, sacrifices and the largest financial investment that they will make. A trusted business broker is an invaluable part of the acquisition or divestiture of a business.
How Does A Business Broker Serve Their Client
Business acquisitions and divestitures are undeniably one of the most complex legal, accounting and transactional deals that exist. No one disputes the complexities, nuances and the often emotionally charged negotiations that transpire during the purchase or sale of a business. Inside the industry, it is often quoted that the average business deal dies five times before it closes.
Part of the issue of a business purchase or sale is all the parties that can be involved. Attorneys, Accountants, Landlords, Inventory Specialist, Real Estate Inspectors, Vendors and the Buyer and Seller of the business. Someone, the business broker, has to hold everyone’s hand simultaneously, resolving everyone’s concerns, conduct renegotiations after concerns arise while due diligence and the contract are being executed.
A business acquisition is not for the faint of heart or the weak of stomach. A trusted business broker removes emotion, calms down the heated exchange, offers creative solutions and brings vetted and experienced professionals into a transaction. Not every attorney or accountant is a specialist with acquisitions and divestments of businesses. A business broker may offer a long list of professionals that will help sellers and buyers choose who might best represent their interests.
A business owner has often spent decades sacrificing so that their business will grow and prosper. No one should ever underestimate or undervalue the extent to which the business owner has sacrificed or the blood, sweat, and tears spent to make their business what it is. A trusted business broker inexplicably understands and values the dreams and personal sacrifices that the business owner have made throughout the years.
A business broker that is flippantly looking for another deal is not what any business owner is looking for. Understandably, there is A LOT of emotion that is brought to the decision of exiting a business. Business is so much more than inventory and transactions.
A qualified business broker seeks to grasp the history of the business so they can best represent their seller’s interest. Every business has a story, a dream, a beginning, a battle, a sacrifice, victories, memories, tears and now a transition. Most business owners want their business to continue prospering so other families can be supported by its prosperity and continued growth.
Business Broker – The Nuts & Bolts
Business Broker Valuation – What is your business really worth? I love asking business owners this question, “So, how much do you want to sell your business for?” As you might imagine, I get a lot of interesting responses to this question. There are three commonly used valuation tools that business brokers use. There are also very detailed certified business valuations that a seller can request for purchase.
The three most common valuations tools are the Market, Income and Asset Approaches that business brokers use to assist business owners when determining valuations.
- Market Approach – Uses a guideline from publically traded businesses to find the common multiple across industries. This method is considered very reliable due to the vast information collected from like-kind industries across the nation.
- Asset Approach – Book value, asset accumulations, and excess earnings are a few of the considerations used for the asset approach. One concern of the asset approach is its inabilities to value ongoing and future earnings.
- Income Approach – The income approach determines value based on the income stream that an investor can reasonably expect. This approach provides a strong indication of what a business with positive income is worth.
Knowing the value and pricing of your business is critically important to the sale of your business. Most business owners want to sale their business quickly and for the highest price possible. Correctly pricing your business is the key element in making the aforementioned desire a reality. Your business broker will assist you greatly in understanding the true value of your business.
Marketing By Your Business Broker – Confidentiality is the foundation of the seller and business broker relationship. The number one concern that business owners share is not wanting employees, vendors, customers or their competition knowing that their business is for sale. Savvy business owners know that their business is being valued up to the month prior to the sale of their business. This means the business owner must keep their focus on growing their business while their business is being sold.
An experienced business broker markets your business in a general way that doesn’t reveal the specifics of your business. No one will see any detailed information until after they have signed a Non-Disclosure Agreement and have been vetted financially.
Your business broker will produce a professional Executive Summary of your business. These executive summaries are impressive as they are the first introduction that potential business buyers will have to your business. Again, these summaries are written in a general way so that your place of business is never identified or revealed.
Seller Financing – Reduce taxable income, sell your business for a higher price and make better interest on your money than most investment is what seller financing does for the business seller. Simply put, when a seller offers seller financing seven things happen:
1. Confidence – The business buyer sees that the business owner has great confidence in their business, which is a strong signal to interested business buyers.
2. Bigger Pool Of Buyers – More people are now eligible to buy your business, which will bring greater competition to your offers (Higher price).
3. Tax Benefit – Business sellers pay taxes during the years that they receive payment. If the business owner receives a large lump sum during a high earning year then their tax exposure is higher.
4. Interest Earnings – A business owner can charge a higher interest rate than what the bank is currently offering allowing them to make a bit more on the sale of their business.
5. Speed Of Transaction – When a potential buyer applies for an SBA loan the process can be long and drawn out. Seller financing allows the business divestiture to happen quickly after the buyer is vetted financially.
6. Security – Your attorney will draw up the seller-financing contract in a specified way that ultimately protects the seller. The business seller is also protected through a hefty buyer deposit and the potential loss of the business if they are late on any payments.
7. The Real World – A large business brokerage team that we work with has been in business for over 40 years. They state that 65% of all of their business transactions include some part of seller financing.
Business owners need to give serious consideration to seller financing when attempting to sell their business.
Buyer, Seller Interest Meeting – Potential buyers will want to see the business and meet the owner to ask questions before entering into the contract. Your business broker will prepare both the buyer and the seller for this meeting that usually happens at the business before or after regular business hours.
Due Diligence – There is a lot of hand-holding during due diligence. The business buyer is preparing to make a serious offer and there is a lot of information that he or she will need in order to feel good about making an offer. The vast majority of business buyers are doing so for the first time and this process can be nerve-racking and frightening.
An experienced business broker will communicate daily with the buyer and seller to answer questions, calm fears and to keep the ball moving forward. For many business owners, this sale is also a first time experience for them as well. While they have years of experience running their business, very few have walked through the actual process of selling a business.
Offer, Contract & Terms – Some people wrongly compare a business sale to that of a home sale. Trust me, these two transactions are like comparing apples and oranges as they share very little in common. The complexities of selling a business are enormous, lengthy and laborious. Deals under contract often fall apart because business brokers lose sight of the concerns of the deal and fail to offer solutions when issues arise and issues WILL arise. There is no such thing as a clean and easy business transaction and a business broker is constantly guiding the deal process to its eventual closing.
Attorneys, accountants, inventory specialists, landlords, and the buyer and sellers are in a constant everyday conversation that is made up of questions, concerns, solutions, compromises that each have to be cleared, vetted and signed off on. A legal business transaction has to be taken very seriously and great attention to detail must be given at all time. All of this has to happen while the business owner continues to keep his/revenue and profits moving forward right up until the sale of their business.
The earnest money for the contract must be kept in an escrow account that is legally authorized. Money placed in the escrow account can only be distributed as both buyer and seller ultimately agree as to its release.
Not All Business Brokers Are Alike
My mother-in-law was once taken advantaged of by a business broker. This was long before we were in the business. My mother-in-law was charged a hefty “upfront fee” and really never saw her business broker again.
Transworld Business Advisors does not charge an upfront fee to list your business. Think about this- If you pay a sizable upfront fee, what motivation does the business broker really have to sell your business? They have already, in essence, been paid.
Transworld Business Advisors is the world leader in the business brokerage industry. Currently, Transworld Business Advisors has $3.5 billion dollars in active listing inventory and we have offices in 16 countries around the world.
Transworld Business Advisors doesn’t want to make one dime until your business has been sold. In other words, we have to deliver on our promise to market, transact and sale your business. We are that confident that by treating people fairly, honestly and by hard work, we can deliver as we have for the past 40 years of being in business.
The Benefits Of Using A Business Broker
Imagine owning something of great value that you have decided to sell. Now imagine the difficulty and sensitivity of selling this item if you can’t tell anyone that you have something to sell. This is the exact position that business owners find themselves in when they get ready to sell their businesses. Unlike real estate, business owners can’t place a “Business For Sale Sign” on their front door or in their front lawn.
Savvy business owners understand the sensitive nature and importance of privacy. Keeping the sell of a business confidential from customers, employees, vendors, landlords, and competitors is a top priority for business owners seeking to sell their businesses.
Your Raleigh Business Brokers
1. Confidentiality – Professional business brokers market businesses in a private and confidential way. Established brokerages have built time, money and energy building substantial buyer and investor databases that can easily be leveraged when businesses come on the market.
Thousands of potential buyers will see your business when you use the services of a qualified business broker. Once interested buyers show interest they are sent Non-Disclosure Agreements and Personal Profiles to gauge genuine interest and financial capacity. These measures ensure confidentiality, protect business interests and vets potential buyers.
2. Profit – On average business owners see a financial gain in selling price when using a business broker. Most business owners have no access to industry-standard metrics that help determine industry-specific business valuations. Many business owners ask their friends, read a few Internet articles or ask their accountants (that have NEVER sold a business).
Think about the lack of rationale. Business owners spend their lifetime, invests their hard-earned money and have given enormous sweat equity building their businesses. The investment that business owners make cannot be overstated when you understand the early mornings, late evenings, family sacrifices and the countless numbers of hours they have given.
We live in a world filled with professions for obvious reasons. Surgeons, dentists, mechanics, eye doctors and many more are examples of specialists we use when we need their services. A wise business owner will seek the help of a professional when they prepare to sell their greatest investment. Unfortunately, some uninformed business owners undervalue their business and lose out on potential financial gains.
3. Marketing – One benefit of using a business broker is a robust strategy for marketing businesses. A close friend of mine recently received over 900 buyer inquiries on a business that he recently sold. 900 potential buyers contacted him to get more information on just one business. Needless to say, this business owner was overjoyed when they received an offer well above their initial asking price.
When a profitable business with good books is valued correctly and marketed by a business broker the business will most often sell quickly. The key is getting the business in front of as many vetted buyers as possible.
4. Vetting Buyers – Have you ever heard of the term “tire kickers” or the saying “buyers are liars?” There are good reasons that labels like these have been around for decades.
I grew up in the south where we are taught to treat everyone with kindness and with great respect. In general, this idea is a great personal standard but when selling a business, owners do not have countless hours to entertain unqualified buyers that have little financing hopes to ever purchase a business.
Business acumen is also a benefit of using a business broker when vetting potential buyers. Most business owners do not want to sell their businesses only to see a new owner drive into the ground in just a few short months. The vetting of potential buyers is strengthened at buyer and seller meetings so that business owners can meet and ask potential buyers questions regarding their backgrounds.
5. Legal & Accounting – Attorneys, accountants, and landlords are all a part of the business selling process. The seller has attorneys and accountants and so does the buyer. It is next to impossible for a business owner to speak privately with the buyer’s attorney and accountant and vice versa.
When problems arise and they will, who negotiates and settles these issues. A benefit of using a business broker is this hassle becomes their issues to remedy and bring to resolution.
We recommend to our clients to always have legal and accounting representation. All of the boxes need to be checked and then double-checked for a truly successful closed deal. A benefit of using a business broker is they hold everyone’s hand on a daily bases through the closing.
6. Negotiations – Did you know that nearly 50% of business sales fall through after there is a signed contract? Have you ever purchased a home and seen the enormous amount of emotion that arises during the transaction? Business owners and business buyers are complex and emotional people just like you and me.
A business broker aids in this process by keeping the facts front and center and by keeping emotions in check. In every sporting event, we are used to seeing referees or umpires aren’t we? Why can’t everyone just play fair, play by the rules and always show preference to the opposing side?
Business deals can often bring out an aggressive nature in people (I tried to say this in a nice way). The truth is, we have refs for a reason. The benefit of using a business broker is that they can bring calmness to the madness of selling a business.
Make no mistake about this point; selling a business is not for the faint of heart. Feelings are hurt, people are offended, tempers flare, words are spoken and often the contract is ripped apart because the side couldn’t come to terms.
A wise business broker remains calm and provides creative solutions to unforeseen roadblocks.
7. Peace Of Mind – How many hours does the average business owner work? Inc.com believes that a large portion of business owners work over 60 hours a week.
How is a hard-working business owner going to continue to make a profit, market their business, vet buyers, set up buyer interviews, work with attorneys and accountants, and negotiate the sale of their business?
One benefit of using a business broker is sanity and peace of mind. A business broker allows the business owner to keep their eyes on the prize of leading their business and growing profits.
Make no mistake about this point; selling a business is not for the faint of heart. A benefit of using a business broker is that they get deals done.
Preparing For A Business Broker Meeting
Most business owners will only sell one business in their lifetime. When that time comes, most business owner’s turn to a professional business broker due to time, legal considerations and increased profit from the sale.
One of the first things a business broker provides is business valuation. Businesses are valued primarily in two ways: A percentage of annual sales and a multiple of the owner's benefit. These multiples and percentages vary from industry to industry and a professional business brokerage helps bring clarity with these factors impacting business valuations.
Truth Number One
When you ask a business owner, “How much do you think your business is worth?”, the answers range from, “I have no idea”, to some enormous over-inflated price. Remember that pricing a business is similar to pricing a home in this one regard.
Your home and business are only worth what the market will pay. If every house in your neighborhood recently sold for $175.00 a square foot, then chances are that your house will sell for about the same price. Yes, you may want to sell your house for $300.00 a square foot but chances are it will only set on the market and never sell.
What Information Does A Business Broker Need
A professional business broker will want to hear your story, meet you as the owner and they will want numbers. Remember that it is these NUMBERS that will sell your business. These same numbers will need to be proven during due diligence to verify that they are 100% accurate.
A business broker will need details regarding your lease, square footage, business legal name, the number of years in business, Profit and Loss statements, last three years of taxes, owner benefits, annual revenue, expenses, FF&E, Inventory, and leasehold improvement numbers.
Additionally, your business broker will ask the following questions:
· Reason for the sale of a business
· Who is the owner(s)
· Hours of operation
· Number of employees (FT/PT)
· Franchise (yes/no)
· Will you provide training for the new owner
· Will you sign a non-compete
· Will you provide seller financing
A professional business broker will then take these numbers, recast them and then provide you with a valuation. At the point that you engage a broker, you need to have a pretty good idea that you are ready to sell because the above work takes a lot of time and effort for a business broker.
How Do You Choose A Business Broker
Capacity, Character, and Chemistry are three absolutes when choosing a business broker that will represent you during the sale of your business. Selling a business isn’t only about the numbers. Selling a business is also an emotional decision, as many business owners will attest.
Capacity- Does the business broker that I am considering has the experience and training to sell my business? Selling a business is technical, nuanced and it requires emotional determination to get a business deal to the finish line. Dealing with attorneys, accountants, landlords, and buyers isn’t easy.
Character- Is my business broker an honest woman or man? You only have one opportunity to sell your business so make sure that you work with someone that has the character to get the job done right.
Chemistry- Do I like my business broker? You are going to be working closely with your business broker for months or perhaps close to a year. You are going to want to use a business broker that has relational capital with yourself and others.
Choosing A Business Broker
Relationships are always important in business and they are especially important when choosing a trusted business broker. You are going to be sharing some very private and personal information with this individual so trust has to be established.
1. Active Listings- I would suggest starting by looking at their website. Look at the actual number of listings that they have in your city or county. Some business brokerage firms are a bit deceptive because they show listings from all over the state that their other agents have secured. You will want to know how many active listings actually belong to the business broker you are considering.
2. Business Activity- The more listings your business broker has the more buyers she/he has. The business broker in your area that has the buyers is the one selling the most businesses. Remember that business listings attract business buyers.
3. Experience and Education- Ask your business broker for a few success stories. Experience and education are both tremendous attributes for a successful business broker. Experience and education are not all that matters but they do help when constant negotiations are taking place with sophisticated buyers, attorneys, accountants, and landlords.
4. Business Brokers Contracts- Like any other business transactions there are legally binding contracts involved with selling a business. You will want to pay attention to the commission structure, exclusion periods (12 months) and other details covered in the marketing agreement. Most marketing agreements are a simple one-page document that your business broker will gladly leave with you for review.
Lastly, make sure that you choose a local business broker that understands your local market.
Contact us today if you’d like to receive a free seller’s information checklist.