IBBA Canada is a Chapter of the International Business Brokers Association (IBBA), an association for the professional practice of Business Brokers and Intermediaries

 

Proper pricing is a must when you go to sell your business. And that means an asking price that is reasonable and correct.

In early December, the Wall Street Journal proclaimed 2015 the biggest year ever in the U.S. for mergers and acquisitions.

At home, Canadian companies have been turning their attention to the domestic market with 66% of respondents in an October Ernst and Young Global Limited survey identifying the Canadian market as their primary focus for M&A. Some 57% were focused on cost reduction and operational efficiency—up from 31% one year prior—consistent with what our offices are seeing.

You want to sell your business. Fast.

And also get the best price for it, of course!

Let’s start by what that really means.

While six to twelve months is the average time to sell a business, selling time varies by business size, type, and market. Based on that model, six months is quick!

Simply lowering the price will seldom cause the business to sell, although there are some buyers in the marketplace who will scoop up grossly undervalued businesses. But then you won’t get the best value from it.

For the most part, people won’t buy your business if they don’t like it– never mind the price.  The search for the right ‘fit’ in a buyer is still one of the most critical parts of the process.

So—whether you plan to sell it yourself or engage a professional i.e. a certified business broker to assist you in selling—what is the process? And what can you do to keep the momentum at each stage?

Spread the word. Business brokers are trained to sell businesses. And that’s what they do!

The TOP REASON to use a certified business broker to sell your business is that businesses offered through business brokers have a much higher listing-to-closing rate than those offered through realtors or listed directly by business owners.

In general, business brokers successfully close between one out of four and one out of seven listings. Real estate agents close about one out of 20 business listings. For sale by owner (FSBO) businesses close at a lower rate.

In Canada, Sunbelt Business Brokers closes 70% of its engagements to sell a business.

Spread the word. Business brokers are trained to sell businesses. And that’s what they do! Click to tweet!

 

Buyers and sellers sometimes overstate, understate or "forget" to state

Like teachers and the proverbial “dog ate my homework” cover story, seasoned business brokers have also heard it all. Only our tall-tale tellers are taller. And they often don’t realize what they’re telling us is untrue.

Some are, in fact, keeping the truth from themselves.

It happens with those who want to buy a business and those who want to want to sell a business. Typically, their errors and omissions fall into one of three buckets: overstating, understating and “forgetting” to state.

 

Few realtors are business brokers, but a large number of business brokers are realtors. It's an important distinction—especially if you want to successfully sell your business.

Question: What is one of the first things a real estate agent will do?

Answer: List your business on the Multiple Listing Service (MLS).

A listing in the MLS can immediately destroy the value of a business. Telling the world that your business is for sale can cause it to lose employees, customers and suppliers.

Business brokers have very different protocols for advertising, disclosing information and handling buyers:

• A broker with a well-established firm can expose the opportunity to hundreds of prospective buyers without employees, customers or a competitor knowing the business is for sale.
• Detailed information is only provided to qualified prospective buyers after a strict and detailed, legally enforceable non-disclosure agreement (NDA) has been signed.
• Advertising won't specifically identify the business.
• A broker will also screen prospects to confirm their resources and potential for assuming your business so you won't waste time with "tire-kickers."

We have just published our first book—Insider Tips on Selling a Business in Canada, and what a great feeling!

I believe that we cannot be successful until we have made the people around us successful.

Likewise, if we can help enough other people to achieve their goals we will achieve ours.

In our line of work, these "other people" are the men and women who a) own a business, b) want to own a business, or c) want to help business buyers and sellers through their professional services – business brokers, bankers, accountants, lawyers, wealth planners, business coaches, etc.

Most business owners have spent many years pouring passion and hard work into building their business and it is likely the largest asset they own. While many count on the sale of their business as part of their retirement planning, they do not have a solid understanding of how to prepare for it or what is involved. They know how to run their businesses to make them successful. But they don’t how to sell one.