FAQ’s by Business Sellers

When is the best time to sell my business?

  -  The short and real answer is “when your ready!” When you are
     emotionally ready!

  -  It has nothing to do with market timing.

  -  If you are debating with yourself about selling your business consider
     having a discussion with people who work in the industry of selling
     businesses. Consult with an Attorney, CPA, or Business Broker. 
     They can help you learn about the process of selling a business 
     and decide how to transition to life after you sell your business. 
     The more you know the more comfortable you will become.

How much is my business worth?  

  - A professional business broker/intermediary can give you a general 
     price range based on your type of business and the market 
     conditions, generally free of charge. This will give you a ballpark 
     number from which to make additional decisions.

  -  Based on the above numbers you can consider a formal Valuation. 
     This will not only give you a definitive value at a point in time it will 
     help you identify issues that you can act on to enhance the value 
     of your business.  

  -  Keep in mind that the actual price of a business in a transaction 
     is set by the buyer & seller and the structure of the transaction.

How long does it take to sell a business?  

  -  The general industry experience is approximately six to eighteen
     months.

Who will buy my business?

The following are some general characteristics of the buyer market:

  -  Professional Corporations and Investor Groups that buy businesses
     generally have a minimum revenue requirement of $10 million and 
     $1 million in profit and/or cash flow.

  -  Public and Large Private Corporations have similar requirements in
     revenue and profitability with the additional requirements of a 
     proprietary technology, product, a certain geographic territory or 
     types of customers.  

  -  Companies with revenues of $5 million to $10 million can be sold 
     to both corporations and individual buyer groups or a company in
     their own industry. Corporate purchases in this revenue range are
     industry specific and fit a target purchase profile.

  -  Companies with a revenue size below $5 million are generally 
     sold to individuals.

  -  There are exceptions to the revenue size and profitability 
     requirements. These exceptions generally are based on technology
     (software, IT and biotech) other technology advantages, products,
     customer base, proprietary manufacturing processes, competitive
     advantage and/or a sustainable business model.

     In addition to the revenue and profitability requirements, it is 
     important that your business be packaged, staged for sale and
     positioned properly to gain interest from the broadest available 
     markets.

Do all businesses put on the market sell?

  -  Unfortunately the answer is NO!     

There are no definitive statistics but the 
following are general industry estimates:

  -  Approximately 25% of companies with revenue of $5 million or 
     less actually sell.

  -  Approximately 33% of companies with revenue $5 to $20 million 
    actually sell.

  -  Approximately 40% of companies with revenue over $20 million 
    actually sell.

There are many reasons for the low closing percentage, not all of them obvious.

Check with your advisors on the probability of your business selling and closing as part of your decision process. There are definitive steps in the business sale process you should follow to enhance the probability of selling your business.