Selling a Business in Minnesota
Are you currently contemplating the sale of your business as an exit strategy? If your company has a good track record and is positioned for a new owner to take over ..... Now may be the right time to sell . Whatever the reason and timing there is usually only one chance to do it right. Business Facilitators can help with selling a business in Minneapolis, St. Paul, and the Twin Cities area.
During our experience in consulting with Sellers and Buyers We have observed three causes why good businesses do not sell.
1. IMPROPER VALUATION OF THE BUSINESS.
- Result : Loss of interest by serious prospects.
- Result : A negative perception of the Business ... it's value and potential.
- Result : Lost opportunties in attracting quality Buyers.
Business Facilitators is a business broker that will personally help you get off to the right start towards selling your business . Our professional experience, market knowledge .... and added value services, will make it possible for you to reach your exit goals.
Business Seller Services to Sell Your Business
ESTABLISH GOALS WITH SELLER
- Agree on seller's goals, expectations and exit strategy.
- Review financial performance, marketable qualities, industry position and growth potential.
- Complete valuations, facility audit, real property appraisal and establish offering price.
- Prepare business prospectus, real property informational report and marketing plan.
- Launch marketing plan using targeted ads, direct mail and pre-qualified database to contact potential buyers.
- Screen buyers, review their business qualifications, acquisition criteria and financing resources.
- Buyers must sign Confidentiality Agreement. No financial reports are released without seller's prior approval.
- Present business to serious buyers. Schedule appointments with buyer and seller to examine company operations and tour facilities.
- Evaluate proposals, negotiate transaction structure details, seller financing terms and recommend a course of action.
- Prepare Letter of Intent and Purchase Offer Agreements. Coordinate Due Diligence review process.
- Finalize pre-closing details with buyer, seller and advisors. Arrange closing date for execution of agreements, verification that all conditions have been met and Transfer Title on the Business and Real Property.
Selling Your Business? Ten Things You Need to Know
Business Owners: Understand these key steps to a successful transaction
- If you have decided it is time to sell, arrange a meeting with your attorney and accountant. Obtain their input on legal matters and tax implications you need to understand prior to selling.
1. Transaction Team.
- Do you have the time and knowledge to sell your business? If not, interview and select an experienced business broker. Business brokers know the market, and will confidentially solicit, meet, and pre-qualify buyers. A broker provides the necessary marketing and professional support throughout the transaction process. Broker commissions and length of listing contract period are negotiable. Remember, businesses usually take 6 to 9 months to sell.
2. Use of a Business Broker.
- Establish a marketing plan to expose your business to potential buyers. Consider ads in local newspapers and internet sites that specialize in business sales, as well as direct mail to strategic industry contacts and investors. Be prepared to let buyers know why you are selling and how you determined the selling price. Logical reasons for selling include: retirement, health issues, and no longer wanting to own a business. Experienced business brokers can provide professional valuation reports to validate the fair market price of your business.
3. Marketing and Offering Price.
- Prepare a list of tangible assets included in the sale and their estimated fair market values. Assets include in-place fixtures, furniture, equipment, vehicles, and leasehold improvements. Don’t over look intellectual property rights, patents, and current research/development projects. Value of inventory (at cost) and net receivables assigned to buyer will need to be finalized and agreed upon prior to closing.
4. Tangible Assets.
- You will need to have current detailed financial reports and tax returns available. Buyers will want the past three years’ financial reports and tax returns to verify actual performance, and the balance sheet to determine current receivables, payables, assets, debts, and liabilities. Buyers will look at the adjusted net profits [EBITDA], cash flow performance, and internal accounting procedures in place.
5. Financial Information.
- A profile of your business is essential for buyers to review prior to any meetings. You or your broker can prepare a blind profile that includes: type of business, approximate location, background, summary of business operations, markets served, unique characteristics, marketing strengths, growth opportunities, annual gross sales, and asking price/terms. Also include information on existing building lease and renewal options. Provide a complete description and price for real property if it is part of the sale. Confidentiality Agreements and personal interviews with prospective buyers should be completed prior to providing your actual company name, specific location, and financial performance information.
6. Company Profile.
7. Buyer Meetings.
- Plan on how you will arrange seller-buyer introduction meetings. Schedule these meetings after hours if employees are not aware of pending sale. Buyers will want to examine business operations, organization structure, and key roles you and your management team play in daily operations. Be prepared to confirm your willingness to stay on during transition period. Your facility should be attractive, bright, clean, uncluttered, with all equipment in operating condition.
- Qualified buyers who want to move forward should provide a Letter of Intent. This document, which is non-binding, delineates the general purchase terms, conditions, offering price, structure, and terms of seller’s financing provisions and time lines both parties will need to meet. At this stage, buyer and seller should agree as to the extent of respective due diligence investigations. Your broker can provide a LOI draft which will also be used as the foundation for a Purchase Agreement.
8. Letter of Intent.
- If both parties agree on the LOI terms and are ready to move forward, a definitive Purchase Agreement (which can be drafted by your broker) will need to be prepared, signed by the buyer, and submitted with an earnest money check for review by the seller and advisors. All of the terms and conditions, seller’s representations, disclosures, indemnifications, and warranties of this transaction will need to be stated in this agreement. Upon approval of final sale price adjustments and execution of all documents by both parties, this Purchase Agreement becomes binding.
9. Purchase Agreement.
- You will need to set a closing date and coordinate it with advisors, broker and title company. Make sure you have all necessary documents required to transfer the legal title of the business, tangible assets, and real property. At closing, escrow money and settlement funds will be distributed to the seller based on final terms and conditions as stated in the Purchase Agreement and related documents.
10. Closing of Sale.
Prepared by Ross P. Bird, President
Business Facilitators, Ltd., Minneapolis/St. Paul, Minnesota
A licensed business broker in Minnesota since 1999, Business Facilitators
has helped business owners within a variety of industries successfully
transfer ownership to qualified buyers.
