We often see clients that are unsure about what their business is worth when they decide to sell. They approach this task similar to what one may do when pricing a home, by looking at market comparables. For example they may look at what other competitors or other businesses for sale are priced at online, or perhaps look at factors such as their own revenue growth or assets, trying to judge what the price would be for their business. Unfortunately, it's not quite this simple if you want to get the maximum fair value for your company.

Have you found a business to buy but don't know what to pay for it?

This is common with business purchases and often leads to a standstill in a successful deal closure. Neither party, buyer or seller, is aware of the fair market price but both are positioned to motivate the price in different directions, for obvious reasons.

For many, buying a business is a major decision and one that you may only do once in a lifetime. It is exciting and daunting all at the same time, and requires some peace of mind . This peace of mind can come from a structured and proven process to buying a business.

By working through a Business Broker, you will get complete information on every listed business. This includes details about the marketing, operations and human resource components of the business and a thorough financial depiction of the business.

At Bridgepoint we take care of the details; however, we have compiled a high level summary below titled, "A Glance at the Selling Process", which provides insight into what takes place throughout a typical business sale.

Statistics show that sellers who ask for all cash receive, on average, only 70% of the list price, while sellers who accept terms typically receive 86% of the list price.

In many other cases, businesses that are listed for all cash just don't sell.

So, it's clear that by offering some financing in the sale of a business, that an owner can increase the selling price they will receive. Here's a breakdown of how these concepts interplay:

You've made the decision to sell. Now what should you do?

It is imperative that you understand why confidentiality is important to the successful sale of a business and what can happen if a sale is prematurely announced.

Confidentiality throughout the sales process is important for many reasons, some include: staff might start considering the stability of their employment and look elsewhere, customers may lose confidence in the business, competitors might capitalize on the news and do something detrimental to your business or creditors may push for earlier payment due to the unknown future.

Selling a business requires dedicated professional attention. It demands a high level of expertise that only those involved in it on a regular basis can truly make it come together. The intricate details of a sale can cause a deal to fall through the cracks if you're not experienced in all phases, even if you're a savvy business owner.

Deal structure is very important. The structure of an acquisition can take many forms and it does impact the final price. Some things that need to be considered are whether it is an asset or share purchase and what assets are included or excluded from the purchase. There are implications for all of these decisions and they need to assessed on how they impact your deal.

Securing financing can often be the "hold up" for most deals, whether it be for acquiring a business or financing for another type of project such as expansion, construction, equipment, etc.

Below is an article I have written titled "How to Get Financing that Fits", its focus is on what lenders typically look at when making financing decisions. You may find the information most helpful as it can help you to better prepare your financial "resume" for the time when you may need to seek financing.

Letters of intent (LOI) are an initial agreement between a business buyer and seller. An LOI summarizes transaction terms and conditions that have been negotiated and agreed upon by both parties.

Most LOIs are non-binding and merely serve as an outline of business terms, key business agreement points, and contingencies, before a Definitive Purchase Agreement and other ancillary documents exist.

Selling a company means being prepared to answer tough questions from potential buyers. It's important to be confident, be prepared, and have all of your company's relevant information available to disclose. Assume that the truth would be uncovered during due diligence, and offer it freely. This will build trust and contribute to a speedier transaction.

Selling your business will likely be one of the largest financial events in your life, so it's vitally important that you are properly prepared when selling your business. For many business owners, the thought of selling the business they have grown and operated can be emotional and challenging.

Due diligence is the most important part of any acquisition. It helps buyers determine the value of the business they're purchasing, evaluates the current management, and brings risk and opportunities to light. Successful due diligence is a matter of proper preparation, managing expectations, and adhering to best-practice processes.

You've made the decision to sell your business. Now what should you do? Your number one priority should be discretion. Without complete confidentiality during the sale of your business, unwanted complications may start to pile up.