| Last week I talked about the Selling Criteria or | | | | would like, ask your broker if your listing is priced |
| areas that can make your listing a lot more | | | | within the market. Chances are that it will not be. |
| competitive, such as good financials, proper | | | | Price, like in residential real estate, is the main |
| documentation (such as lease and franchise | | | | driver in determining how long your business will |
| agreements), equipment lists and others. These | | | | be in the market place. |
| are areas that brokers look into to determine | | | | Secondly, let's talk about financing. In a previous |
| how viable and competitive your listing is-the | | | | blog I mentioned that, in this economic |
| probability of success. | | | | environment, getting financing from lending |
| During my discussion last week, I purposely | | | | institutions, such the SBA or Commercial Banks |
| omitted two additional elements (c'mon, I don't | | | | has become increasingly difficult-although there |
| want to tell you all in one week!!): Price and Seller | | | | are signs of improvements in this area. So, if |
| Financing. I omitted them, because these two | | | | buyers cannot get financing through commercial |
| elements merit a separate discussion altogether. | | | | banks, they cannot buy your business. Seller |
| Let's address Price. In our office, we use a | | | | financing, as mentioned before, has replaced |
| terminology for listings with the correct price | | | | commercial banking. What this means is that the |
| structure-"In the Box." These are listings which | | | | degree of financing you provide, would be an |
| appear to be within an appropriate market value. | | | | indicator of how fast you will sell your business. |
| In other words, if your type-business normally | | | | Today, as a rule of thumb, sellers should be |
| sells for a multiple of 2-3 times Owners Benefit | | | | looking at financing upwards of 50%. Additionally, |
| (Net Profit plus owners salary, benefits, | | | | Buyers look upon this as a gesture of confidence |
| depreciation, interest and other miscellaneous | | | | in the business being sold-see my blog on why it |
| additions) and yours is within those | | | | makes sense to provide seller financing for more |
| parameters-you are "IN THE BOX." That plus | | | | details. |
| good financials and documentation would make | | | | So, before you beat up your business broker for |
| the sale of your business almost a done | | | | the slow response on your listing, please |
| deal-brokers like to deal with listings that are "In | | | | determine if any of the above applies. Trust me; |
| the Box." | | | | you'll be happier in the long run. |
| If your listing is not getting the activity that you | | | | |