8 Tips to Sell Your Business in Tampa, FL

Sell a Business in Tampa

Sell a Business in Tampa

Here are a 8 key tips to help you sell your business. It is important to plan and prepare since many businesses that owners try to sell, just never sell.

Forbes had an article in 2016 showing only 20% of businesses for sale don’t sell (see The Business For Sale Marketplace — Why 90% Of Listings Never Sell – Forbes, October 24, 2016, and many other articles on Google).

1. Make a Plan

Understand what you clearly want and need when you sell your company. Do you only want the highest price? Do you have a date you wish to sell by? Are the intentions of the Buyer important to you? Does your business have certain licenses that need to be accounted for? When you sell, do you have a plan for the cash you receive? How will the assets be allocated for tax purposes? You and the Buyer will need to agree to the same terms on the IRS Form 8594.  Reach out to the right advisors early in the process.

2. Gather Financial Data

Gather your Profit and Loss Statements, Balance Sheets and Taxes from the last three to five years, along with current year-to-date financial data. It’s normal to have financials prepared so that you pay the least amount of taxes. Clearly show where items that are essential benefits to the owner but have been added in to show a lower net profit. Help any prospective Buyers understand the total owner benefit, sometimes referred to as Seller’s Discretionary Earnings or SDE (see our article How Much is That Business Owner Earning? Calculating SDE. for formula and explanation).

3. Understand Business Value

Take steps to understand what your business is worth on the market today. Don’t rely on what others are advertising them for. Most people have never sold a business before and have unrealistic expectations of value. Sit down with a valuation specialist or an experienced Business Intermediary or Business Broker. Be sure that the advice you accept comes from someone who routinely sees and understands what similar businesses have actually sold for.

4. Get Lender Pre-Qualification

If you can get your books and records clear enough for the banks to understand, it will be far easier to sell your company and may get you SBA Pre-Qualified. Pre-qualification adds comfort to Buyers about your business. Plus, with only 10% down (the minimum required by the SBA guidelines as of January 1, 2018), more Buyers will be eligible to afford your business. Reach out to several banks to see if your business is likely to get SBA financing. Most people finance homes and cars and will be happy to get bank or Seller Financing.

5. Keep It Confidential

In most cases, you will be better off if your customers, employees, competitors, and others are unaware that your business is even for sale. Always have prospective Buyers sign a Non-Disclosure Agreement (NDA) and verify their identity. Protect your business and don’t give in on this.

6. Create a Selling Story

Your business is worth far more than what is reflected in the financial documents. Communicate elements of your business legacy. Share its history and why it stands out from the competition. Give the facts and data that are not included in financial documents.

7. Market Your Business

Buyers can come from all around the world, with international Buyers seeking visas (E2, EB5, L1). When you market your business online, use generic photos that you can buy from online resources. Don’t use your business phone number since someone might track it to your business or inadvertently tip off your customers or creditors that your business is for sale.  If you use your existing phone number, you also run the risk of employees or others recognizing it. You can get a temporary phone number from a wide variety of companies.

8. Get the Right Offer

Insist that a prospective Buyer makes an offer in writing with specific terms, such as contingencies, closing date, non-compete, training/orientation and transition time are all included. Ensure the Buyer has put in a reasonable amount of escrow down and clearly state in the offer’s terms what is refundable or non-refundable. Create a calendar with all the essential dates for tasks that need to be completed. These tasks include date to expect a list from Buyer for Due Diligence items, ending date for Due Diligence, when Buyer will apply for a loan, Closing Date and more. Keep these dates clear and if you need to change them, create an addendum specifying the changes and have it signed by both parties.

Final Thoughts

Always get the help of an attorney familiar with business transition to help with all legal issues. Seek the support of an accountant that fully understands business sales. You may wish to speak with a financial advisor regarding what to do with your proceeds after the sale. Consider getting support from an experienced and engaged Business Intermediary / Business Broker. The International Business Brokers Association lists professionals who have invested in their careers to help business owners sell their businesses successfully.

There are many important factors to consider when selling your business. Be prepared and get support where you need it. Hopefully, these tips will get you started on your way to selling your business.

Good luck and feel free to reach out if you have any questions. You are welcome to email us at Info@BuyBizUSA.com.

Thanks,

Brian Stephens – BuyBizUSA.com