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BUSINESS SELLING

How to Find the Right Buyer for Your Business

Finding the right “fit,” is quite possibly the single most important factor in successfully selling a business in Florida. While finding the right fit between buyer and seller, there are other factors that can contribute to a successful merger or acquisition.

DUE DILIGENCE

Don’t rush into a deal with the first potential buyer that comes your way. You need several things in place first: a mutual non-disclosure agreement, business valuation, letter of intent and a financial and demographic review.

There are lots of potential deals out there. “The current buyer/seller ratio is something like 50:1, so remember that there are other possible buyers. Those who feel it’s important to buy or sell immediately are probably wrong.

After determining the right fit, it’s best to work on other details in a potential deal. A negotiation that leaves both sides happy is crucial. Transition for the buyer and seller goes smoothly when both parties leave the closing table and friends and working partners.

Florida Business Brokers can provide a business valuation that is fair to both sides. A proper business valuation should consider: cash flow, risk, demographics, expenses and the sustainability of the business’s compensation structure.

OTHER CONSIDERATIONS

Seller and buyer should both consider transition risk.

As the buyer, you should consider how many of the clients will transfer to the new entity. That number could be as low as 65 to 70 percent, which could wreck the economics of the purchase. In a well-matched purchase, the numbers should be around 97 to 98 percent.

Market place demand should be examined. A business built in a wealthy area and filled with financially well-off clients is worth more than one in a less-wealthy area that serves clients with moderate incomes.

If a business occupies a market niche, is it a market niche that contains many other planners, some of whom might be interested in purchasing the firm. Or is the list of potential buyers limited, because so few other planners understand and can work in that market niche?

Once both sides of a deal are satisfied, bank financing, including loans backed by the Small Business Administration, are often a financing option when businesses change hands.

As a business seller, you should maintain a client database, typically via a customer relationship management (CRM) system. The database should contain your clients contact details and record of sales. Transferring this database to the new owner will give your business a higher valuation and the buyer an assurance of profitability.

Allow potential buyers to visit the business to do research on market value, the premises and business trend. Make sure all equipment used in the business are maintained and you have a current valuation on machinery.

Business brokers can offer a great deal of help to buyers and sellers and often cater to popularly neglected issues. Brokers also make sure that all legal aspects are addressed. Florida Business Brokers understand that the value of a business is reflective of the owner’s value in the market. Working with Florida Business Brokers gives you insights into increasing the value of your business before you list it for sale. This increases your profit potential and less risk for the buyer.