Frequently Asked Questions
Why do I need a broker to sell a business?
The process of buying or selling a business requires dedicated, professional attention. Marketing and facilitating a business transfer is a full-time job! You deserve someone who will work as hard as you do. A qualified Broker will save buyers and business owners money by helping them to avoid costly mistakes, effectively marketing the appeal of the seller's business, and maximizing exposure to serious, qualified buyers--all with complete confidentiality.
For example, ask yourself:
- How do you reach qualified buyers, including possibly competitors, without disclosing your intentions to sell?
- How do you evaluate your business objectively to ensure you receive top dollar for your investment and avoid costly negotiating tactics?
- How do you prepare and provide the information a prospective buyer will require to interest him in pursuing your business in favor of other options?
- How do you arrive at the best price and terms, including the intangible and goodwill values of your business?
- How do you maximize your favorable exposure to potential offers while minimizing your potentially damaging public exposure to customers, competitors, employees, and suppliers?
- How do you market your business in all of the appropriate markets, databases, and media efficiently, effectively and confidentially?
- How do you screen and pre-qualify buyers, determine their motivations, managerial capabilities, and financial strength?
- How do you effectively sell your business, diverting significant time, effort and resources to that process, while continuing to manage your ongoing business productively?
The answer is clear. The sale of your business demands a professional, just as running your business demands a professional.
J. Forte Associates has the expertise, tools, and connections to market and sell your business successfully on a national basis. We work very hard to protect your business investment and maximize your net after tax profit on the sale. It is to our advantage and yours to obtain the best possible price that a reasonable buyer will pay. We pledge to maintain high ethical standards and open and honest communications in all of our business relationships.
Can my business be sold?
Practically, any business can be sold. The real question is for how much and how fast. J. Forte Associates will help you to determine the right price, conditions of sale and will recommend changes that may be required in order to sell your business.
How much is my business worth?
Unlike any other merchandise on the market the value of your business depends on a buyer. If you ask twelve people about the value of a business, you will get thirteen answers. No one knows exactly what the business value is, but everyone has an opinion.
J. Forte Associates will thoroughly analyze your financial papers, lease situation, marketing, competition and other factors, and help you to determine the fair market value for the business.
What affects the selling price?
Several factors come into play. Two of the most critical are price and terms. Over eighty percent of all businesses sold above $100,000 are sold with one-third or less down and the owner financing the balance. Asking for one-half down will reduce the price by approximately twenty percent. Asking for cash will reduce the price to forty to sixty percent of the one-third down payment price.
A buyer is trying to buy as much business as possible for the money he has to pay down. When a seller asks for $200,000 down on a $400,000 value business, the buyer will keep looking until he can find a $600,000 value business where the owner will accept $200,000 down and finance the balance. High percentage down payments cause buyers to discount offers. The business owner who asks for all cash is not going to succeed because buyers know they can buy three times as much business for the same investment.
The quality of the information provided to a prospective buyer is critical. The value of the assets and cash flow generated by the business must be provable and verifiable. A professional business broker will be able to assist the business owner in arriving at these values.
Competition among buyers creates higher selling prices. When a business is over-priced or the owner does not offer reasonable terms, there will be few, if any, buyers interested in acquiring the business. When a business is priced realistically, and with proper terms, several buyers are likely to pursue acquiring the business. A buyer who knows he has other buyers competing for the business will be highly motivated to offer the price being asked to ensure he does not lose the business to another buyer's better offer.
What geographical area do you cover?
J. Forte Associates represents businesses throughout Connecticut and adjoining Counties neighboring States
How long does it take to sell a business?
The survey compiled by Business Brokerage Press revealed some interesting data on the average period between the day a business was listed for sale and the time in months it took to sell it. It should be noted that business brokers (the respondents to the survey) almost always will sell a business faster than an owner - and for more money.
Average period between listing and sale in months
|
1 to 3 months
|
7%
|
|
4 to 6 months
|
35%
|
|
7 to 9 months
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37%
|
|
10 to 12 months
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16%
|
|
13 to 18 months
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5%
|
|
19+ months
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less than 1%
|
In over 60 percent of the time, a business sold in less than nine months!
How will you promote my business?
J. Forte Associates maintains regular subscriptions to major business listing services. The following marketing sources can be deployed to discreetly market your business.
- INTERNET - JFA will place non-specific advertising for your business on a number of strategically placed Internet sites. The Internet advertising campaign will be specifically tailored to capture the highest level of qualified exposure as possible for your unique business. This customized campaign will be continually tracked through monitoring the number of hits and traffic to your ad. Refinements are made as needed to adjust to shifting traffic patterns.
- PRINT MEDIA - JFA will use print advertising as appropriate to market your business. This type of marketing is used in more of a general context to generate buyer traffic. Forms of print advertising include the local newspaper, and professional journals or publications.
- DIRECT MAIL - JFA has developed a database of thousands of qualified potential buyers. Using our proprietary approach, we tap into our existing relationships with potential buyers with interest in businesses that meet their criteria. Both printed mail and email blasts can be used.
- REFERRAL MARKETING - In addition to direct marketing to specific buyers, JFA has relationships with many professional associations that support a high membership of potential buyers.
What documentation is required in order to place my business on the market?
- Three years' profit and loss statements and balance sheets
- Federal Income tax returns for the business for the most recent three years
- List of fixtures and equipment
- The lease and lease-related documents
- A list of the loans, if any, against the business, with amounts and payment schedule
- Copies of any equipment leases
- A copy of the franchise agreement, if applicable
- An approximate amount of the inventory on hand, if applicable
- The names of any outside advisors
It is very beneficial, having all necessary business documentation prepared in advance. Here's a checklist of most frequently required documents:
Make sure the financial statements of the business are current and as accurate as you can get them. If you're half way through the current year, make sure you have last year's figures, and tax returns, and also year-to-date figures. Pricing a small business usually is based on cash flow. This includes the profit of the business, but also, the owner's salary and benefits, the depreciation, and other non-cash items.
Do you have other questions about buying or selling a business?
Contact our office for answers to your questions or you if you wish, you may send an e-mail to Mr. James V. Forte.
J. Forte Associates, LLC
167 Cherry Street, No. 290Milford, CT 06460
Phone: 203-878-8759
Fax: 203-878-9663
E-mail: info@jforteassociates.com