Low Commission Business Brokers

Sellers of their small business too often reluctantly enter into a sales agreement with a business broker concerned about how the substantial  10-12% commission will impact the amount they will clear if the business sells, and about the restrictive conditions placed upon them over the next 2-3 years. These are certainly valid concerns.  Of course, one option is for the business owner to try to sell the business his/herself. However, this option is fraught risks which can end up costing the owner money, or the deal itself.

 

Fortunately, there is another alternative. If you are considering the sale of your business, you can select Southwest Business Advisors to work with you, side-by-side, during the entire sale process providing you with all of the resources and advice you will need for a successful transaction.

This money saving option allows you to avoid restrictive and expense broker sale agreements by selling the business yourself, while availing yourself of all of the expertise and resources of an experience business intermediary. The best of the first two methods for a simple flat rate fee. 

If this alternative is of interest, we are prepared to help determine the fair market value of the business by providing you with a free preliminary valuation, which will allow you to compare your asking price with that of businesses in the same industry and size.

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Based on a typical sale, our services would include assisting and leading you through each of the following steps:

Step One: Developing and implementing an exit strategy.          

The initial step requires that you develop a clear understanding of why you are selling the business and what is for sale. 

Formation of selling strategy:

°      Articulating Seller’s reason(s) for selling.

°      Do you have a saleable business?

°      Choosing the best time to sell.

°      What is for sale: company assets or the entity?

°      Key legal issues.

°      Selection of Seller’s advisory team…attorney and CPA.

°      Preparing the business for sale.

°      Recommendation(s) to Seller.

          Step Two: Structuring the Sale.  

°         Assets vs. Entity Sale

°         Lump sum payment vs. Seller financing

°         Doing future work for the business

°         Noncompete agreements

°         The future of key employees

 

 

          Step Three: Determining the Fair Market Value of the Business.

If you understand the range of value that your business is in, then you can be more confident that you will end up selling the business for its true value.  These diagnostic and analytical tools are used to evaluate strengths and weaknesses, and to determine if changes to the business would affect the price.  Recast of your company’s financial statements.

°Capitalization Rate.

°Seller’s Discretionary Earnings (Cash Flow).

°Discretionary Earnings Method.

°Ratio Analysis.

°SBA Debt Service Ratio Analysis.

°Recommendation(s) to Seller.

Depending on the size of the business and the Seller’s strategy, an independent valuation of your business by certified business appraiser may be advisable in certain cases. We are affiliated with quality professionals who provide turnkey service for business valuation and appraisal reports. The fee may vary depending on the nature of the business, and the completeness and accuracy of its financial records.

Step Four: Seek Bank Financing (Optional)

If Step Two indicates the business has a strong enough cash flow (SBA Debt Service Ratio Analysis), Southwest Business Advisors would be prepared to approach selected area banks, on behalf of the Seller, in order to seek pre-approval for an acquisition loan for a qualified buyer. 

Step Five: The Sales Memorandum 

This crucial step involves presenting the business for sale to prospective buyers, wherever they may be. This Document is meant as an accurate and comprehensive picture of the company, to communicate the company’s history, product lines and/or services, current financial position and projections, methods of operation, and marketing and distribution. Although this document deals with the company’s strengths and weaknesses, it is a selling document written to give prospective buyers the information they need to make a decision to purchase.

°         Introduction

°         Description of Business Operations

°         Products / Services

°         Facilities

°         Location

°         Market

°         Staff/Personnel

°         Equipment List

°         Financials

°         Projections

As part of our service, Southwest Business Advisors will prepare a draft of this document for the Seller’s approval. The Seller is responsible for providing all relevant information required.

Step Six: Marketing the Business

Once the Sales Memorandum is prepared and approved by the seller, Southwest Business Advisors will list the business for sale on the two leading websites.  If the seller wishes, we will qualify all leads before presenting them to the Seller.

Concurrently, if he or she wishes, the Seller is free to advertise the sale of the business through any other means. The Seller will be provided with the following documentation: 

°         Confidentiality Agreement

°         Buyer Financial Disclosure

°         Buyer General Disclosure

°         Sellers Disclosure

Step Seven: Negotiations to Close

The Seller will be provided with personal consultation, as well as necessary documentation during this phase. It is, of course, highly recommended that the Seller seek the counsel of his or her attorney and CPA during negotiations and the closing of the sale.   

°         How to determine if the buyer is serious.

°         How to justify and support the price and terms established in Step Two.

°         How to prepare for the Due Diligence by Buyer.

°         How to negotiate the details of your transaction.

°         Closing the sale.

Documentation to be included to the Seller:

°         Letter of Intent.

°         Due Diligence Checklist.

°         Purchase & Sale Agreement.

°         Release of Contingency.