Frequently Asked Questions
Looking to buy or sell a business in NC? Buying or selling a business is serious business with many questions which is why we have put together a handy Business FAQ section. Owning a business can be a daunting prospect. There are no guarantees that you will succeed or be happy. At some point after all of your investigation, analysis, and due diligence is completed, you will still have to make that “leap of faith” necessary to proceed with your business for sale.
After taking this “leap of faith”, virtually every business owner will tell you they would never go back to being an employee. Here are some items you should check when considering the purchase of a business. Some of the issues you need to be aware before of you select a business broker or a brokerage firm can be critical to the success of any deal. Take a took below to see some common business FAQ.
Business FAQ For Sellers
1. What is the value of my business?
Calculating an accurate market value for your business can be a difficult task. For an easy and accurate estimate, sellers can calculate the market range estimate of their business by completing the form here. Our market range estimate provides the simplest form of value and is a brief look at your company standing within your industry. For more complete valuation techniques, view our Valuations page here.
2. What is the process to sell my business?
Selling a business can be a long process, but we are here to help expediate it! While a number of steps are required to complete the sale of your business, here are a few general ones:
a. Get financials of business which includes Profit & Loss Statements.
b. Calculate the market range estimate of the business.
c. Create a Confidential Memorandum for potential buyers
d. List your business on a wide range of sites described here.
e. Broker will filter & address any and all inquires on the business.
f. After a qualified buyer makes an offer, seller can optionally accept and complete the business sale.
3. What makes a well qualified and capable business broker & firm?
a. They co-broker their deals with other business brokers to find a buyer to make the deal happen as soon as possible. This gives the buyer an advantage of working with one broker who can select from a larger supply of opportunities for you means your business is exposed to every potential buyer in the market place, even if they have a different broker. After all, the objective is to sell your business as quickly as possible and that means exposing it to as many people as possible.
b. They understand how Small & Medium size businesses works. This usually means they should have experience in owning or operating a business.
c. They support their community and understand how to be part of the business environment.
Business FAQ For Buyers
1. What is the process to buy a business?
a. The buyer completes a Non-Disclosure Agreement (NDA) to receive additional business info.
b. The buyer is sent the business Confidential Memorandum.
c. If the buyer is interested, they will make an offer on the business.
d. If the seller accepts offer, the business sale moves towards completion.
2. Why are financials typically required for a Non-Disclosure Agreement (NDA)?
We typically require some general financial information from the buyer to ensure that each buyer we present to the seller is financially qualified to buy the business.
3. How do I know if I am getting a good price for the business?
While accurately calculating the current market value for a business can be challenging, we ensure that all listed businesses are priced based on where they currently stand in the market to ensure that each buyer is getting a fair market value for the business.
4. How to determine if the seller is reporting all income?
The simple answer is – You can’t! Not reporting income is against the law. You should only consider the income that the seller can prove to you in your analysis. In the case where the buyer is using an outside source for financing, the lenders will certainly not count any revenues, which are not fully documented.
5. Why are Books and Records Important?
Financial records of the business for sale are an excellent indicator of how well the business has been doing in past years, and will become the basis for your projections of how you can maintain or improve the business. Keep in mind most privately owned business accounting systems are not designed to show the business in the best light, but rather minimize the taxes the business owner will have to pay. An analysis of the individual expenses listed will determine which items may be “discretionary expenses” and are not necessarily required to continue with the business going forward. A financial advisor or your business broker should be experienced in helping complete this analysis. Keep in mind you are using historical financial records that show what the business has done in the past. What you can do in the future is up to you. There are no guarantees that the past will or can be duplicated or repeated, and there should be reasons or expectations on why or how you can improve the business.
Additional Buyer Questions
1. How long has the business been in business?
A business with a long track record generally means there are good reasons it will continue to operate and be profitable. A good reputation in the area, customer loyalty, people patronizing the business, and people using its services are all good signs.
2. Why is the present owner selling?
If the current owner just started the business 6 months ago, or is 30 years old, and wants to retire, you should investigate. However, keep in mind that after about six years, people tend to get restless or can begin to experience “burn-out” or antsiness. Sometimes they are just looking for new challenges, so keep in mind why the seller is selling because it is an important question, and you should get a satisfactory answer.
3. Can I see myself running this business every day?
Many times buyers spend too much time analyzing the financial statements, projecting the future and negotiating the deal, and don’t step back and think about whether this is what they really want to do. Buying a business is a major commitment. It is extremely important that you get comfortable with what you will be doing on a day-to-day basis and if you are up to the challenge of owning your own Business. If you feel like it will work, call us and we will help you put it together.
Market Range Estimate™
The ultimate starting point is to find out where your business sits in the market. We've put together a handy Market Range Estimate™ calculator, that will give you a starting point so you can prepare to increase the value for the ultimate day of selling your business.
We Give you:
- A Market Range Estimate™ based off a number of different business types.
- Also, a free phone or email consultation if you need, to clarify any questions you may have about your estimate.
Get your free MRE™ now! Market Range Estimate™
Interested in selling your business? Read our eBook guide to learn how.
