It can be difficult and time-consuming to sell a business. The most difficult part of selling a business, whether its a restaurant, oiflield service company, retail, or any industry, is often managing your emotions and approaching the sale objectively. We can help you position your business to sell and make it easier.
When is it the right time for me to sell my business?
You don’t have to wait until it is too late to begin planning for selling. You will be able to learn more about the business’s value so you can make the sale easier for buyers.
Sometimes, it’s easy to just give up. After a long time building your business, you are ready to retire. When you feel the need or desire to retire, you can sell your business.
Perhaps you have lost interest in the current business. Boredom can set in when we do the exact same thing for too long. It’s possible to sell your business and make money for a new venture. Instead of running two businesses simultaneously, you can give your attention to your new venture and make sure it succeeds.
Another scenario is that your business is growing and doing well. This could indicate that your business is ready to go public. When a business brings in more profits each year, it is considered the most valuable. This is when a seller believes their business has reached its peak and it’s time to exit. You may also be offered great prices if the market is strong and the economy is healthy. Bidding wars can be started by buyers for your business, which could result in more money for you.
What price should I expect for my business?
There are many variables that influence the price of a business. However, at the end of it all, the seller and buyer agree to the same amount. The best sales price ensures that the business is sold at a fair price and within a reasonable timeframe.
These variables include the financials, owner’s role, hours worked in the business, experience of staff and presence of a manager; the quality and trend of the business year-over-year.
A profitable business is typically valued on the seller’s discretionary earnings, or EBITDA depending on its size. These earnings include the pretax and net interest profits before any one-time expenses and all non-related income expenses. The buyer will decide how appealing the business opportunity is and ultimately, the sale price.
Consider all aspects of your business when setting a price. This includes the potential sales generation, physical assets, customer base, and so on. The easiest part of the process is determining the value of your assets. You should also have backups for any financial claims. This will allow you to convince buyers that the price you are setting for your business is fair.
Get your finances in order
The most important factor in determining the correct valuation and selling price is to present a clear, honest financial picture of your company. Buyers, accountants and lawyers will need to see professional documentation regarding the economics of your business, profitability, and true owner benefits during the due diligence phase. The ability of potential buyers to purchase your business will determine whether they are willing to invest money in it. The most important factor in determining whether or not your business is sold is the financial information that you give to potential buyers.
You should have been able to keep your books organized and clear since the beginning of your business. If you have not organized financial records for at least one year prior to the time that your restaurant is up for sale, do so. Potential buyers will be able to see a 12-month-by-12-month historical picture of the business’s performance, and trends. Buyers will likely ask for balance sheets and profit and loss statements. You can have them prepared by your accountant in advance if you’re unable to do it yourself. This will ensure that you don’t feel pressured later on in the selling process.
These are some examples of documentation you’ll need.
- A list of all your assets, including purchase price less depreciation and age
- A copy of the lease
- Check out the list of improvements you have made to your leasehold.
- Copies of all applicable permits and licenses
- Copies of audits, inspections and other regulatory documents
- Copies of your financial statements
- Copies of any other financial documents important
These documents must be available at all times, or at the very least after the final contract has been signed. These documents are vital for determining the business’ value, how competitive it is in the present and the past, as well as identifying any gaps that may need to be filled. Your business broker will assist you in marketing the sale once you have organized your business. What is it that your restaurant has to offer that sets it apart from its competition? You can find it near public transport, the views and outdoor space. These are all factors that can make it stand out and could be the factor that draws a buyer.
After the buyer has been found
If you have found a buyer or negotiations are successful, the last step is to file the paperwork required to close the transaction. The “Asset Purchase Agreement” is the first step in paperwork. This document should be prepared by your attorney. The Asset Purchase Agreement outlines all components of the sale. The sale price, terms (if you have a note), the equipment list, the value and amount of inventory at closing, how long you are willing and able to train the new owner, and any contingencies about the landlord’s lease assignment. There is also a closing date. No matter if you are selling through a broker or on your own, it is important to have an attorney present in order to ensure that the Asset Purchase Agreement addresses all aspects of the transaction.
You should also continue operating your business as though you aren’t selling it, even if a buyer has been engaged. Sometimes acquisitions fall through in the last moment. If that happens, you don’t want any additional work to get everything back on track.
Should I Hire a Broker?
You might be able to offer the best deals for your business if you have the right experience. We recommend that you hire a professional broker. A professional broker who specializes in business sales has many advantages. They can help you find qualified buyers, prepare discreetly for restaurant sales, and market effectively. You may already be in touch with several potential buyers. Selling businesses is different from selling in any other industry. You need a specialist when you’re looking to sell your business. Someone who is knowledgeable in the industry and can explain all details to buyers eager to learn. A systemic and proprietary approach to selling restaurants should result in a lower closing ratio, shorter days on the marketplace, and higher selling prices.
A higher closing rate is possible due to our proprietary process and systematic approach to selling businesses. We have a large database of qualified buyers. We advertise all over the globe with preferential placement on the majority of websites.
Get a free, no-obligation valuation of your business today by contacting us. We are the industry leader when it comes to selling businesses in Corpus Christi, Texas. Fulcrum Development has all the knowledge and experience to help you sell your business.