Frequently Asked Questions

Listed below are a few reasons why sellers choose to put their businesses on the market.

• Under Capitalized The seller has taken the business as far as they can and need a significant capital infusion to take it to the next level. Especially in the current climate, loans are difficult to procure and sellers may need private investors to purchase their business to reach their ultimate goal of growth and profitability.
  


• Dispute with Partners There are instances where partners have differences and one or more partners want to leave the business. This event can cause the remaining partners to want to sell the interests of the exiting partners or plainly sell their business outright to an available buyer. In either case, disputes with partners can cause a business to be on the market for sale.
  


• Divorce Unfortunately divorce is a common reason why sellers want to put their business on the market. This is due to the fact that partners lose their business interest to spouses in marital dissolution contracts. As a result, the partners will choose to sell their business when the dynamic of the partnership has changed.
  


• Death or Illness An owner or partner has suffered death or a serious illness and his or her interest will need to be cashed out to cover expenses or settle the estate.
  


• Relocation In some cases, partners may relocate to a different city which would prevent the continuation of the business.
  


• Burnout Even the best of businesses can be draining and cause the partners to want to sell the business. Typically, the partners are tired of handling the day-to-day operations of managing employees, keeping the books, and other challenges that arise due to owning and operating a business.
  

Are you having difficulty selling your business? Why is this process so challenging? Listed below are the main reasons why businesses won't sell in the market today

• Business is overpriced A business will not sell if it is overpriced. If you or your brokers are not getting any interest in your business, it is probably because the market doesn't see benefit or value in purchasing your business. A business valuation is needed to properly assign a value to your business through quantitative and qualitative factors. Ultimately the market decides the price, but an objective view of the value will appeal to interested buyers.


• Lack of Information In any purchase, buyers want to know what value they will receive for the amount of money they are obligated to pay the seller. Most buyers will not purchase a business if there is insufficient information to demonstrate that the value matches the price tag. The preparation of a good profile not only encourages a buyer to buy, but it also educates their accountants and financiers as to the attributes of your business. The best way to evaluate this is ask yourself the question, "What would I want to see if I was buying a business?"


• Lack of Exposure Whether you choose to sell the business yourself or through a business broker, the bottom line is that you will have to pay for advertising. The most common ways to advertise your business are through the newspaper or internet marketing. Newspapers have typically been the fastest method of obtaining a response for selling your business. Internet marketing is the cheapest form of marketing because buyers can find your business through keywords with no cost to you, unless you purchase pay per click campaigns and you know how to use them. Either way, buyers need to know that your business is for sale and this is difficult without advertising in some form of media.


• The business has been misrepresented in some way In any purchase, buyers want to know that what they are purchasing is genuine and meets or exceeds their expectations. Many sellers go to all the effort of selling their business but the deal falls through during the due diligence period. Sellers will misrepresent their business to the extent that buyers will no longer trust what the seller says. In any business transaction, honesty is paramount to a successful sale.


• There is no market for your business Unfortunately this may be a reality. There are times where there is no market for your business. The market has either made your product or service obsolete, or your business doesn't have the desired profitability to make it a viable opportunity for sale. Sellers must be aware of this possibility when deciding to sell a business.

Valuing a business is a structured process designed to quantify the value of a business interest. Determining the value of an owner's interest in a closely-held business is not a simple process because there is no established market for these businesses. For that reason, an objective professional opinion of value is critical.