Seller FAQs

Frequently Asked Questions Business Owners have when Selling their Businesses

 

What about confidentiality when selling a business?

Unlike the sale of real estate or franchises, the sale of an ongoing business is very confidential for both the seller and the buyer. All inquiries are held in strict confidence. Meetings are confidential, and Gateway M&A representatives are available after hours and on weekends. The need for confidentiality is a major reason to use Gateway M&A since it is very difficult for a business owner to screen possible buyers without disclosing their own identity or the identity of the business.

What is the value of a business?

Determining the value of the business is the first step in preparing the marketing plan for the business. Most buyers of small businesses are buying an income stream to provide a living for themselves and their family. Determining the value for the business based on the assets and owners discretionary earnings is vital to initiating a successful transaction. The seller needs to be realistic in setting the sales price and the down payment amount. Gateway M&A can assist you in determining an appropriate fair market price or coordinating a business valuation.

 

Why should I use a Gateway Mergers and Acquisitions to sell a business?

Gateway M&A representatives receive extensive training on selling businesses. The number of transactions that are successfully completed each year give us a wide range of experiences and resources to handle every virtually every size of business and type of business. Gateway M&A has an extensive database of local, regional, national, and international buyers. Gateway M&A interviews potential buyers on a daily basis to match appropriate buyers with the right business. Gateway M&A can focus on marketing your business so that you can focus on running the business during the period when the business needs to be strongest. Our representatives will assist in finding the right price, marketing the business, interviewing potential buyers, insuring appropriate non-disclosure documents are completed, setting up and facilitating buyer/seller meetings, educating the buyer on the buying process, initiating an offer from the buyer, negotiating the terms and conditions, guiding both parties through the due diligence process, negotiating transition and training plans, removing buyer contingencies, coordinating inventory schedules, and getting both parties to the closing table with the appropriate documentation to complete the transaction. Our representatives are there to guide both parties through the process and to insure a smooth transition of the business.

 

How do you find buyers to purchase a business?

Gateway M&A is well established in the industry. Many buyers seek us out because of our excellent reputation and track record. We also develop specific marketing programs designed for each business. Any advertising or marketing is conducted through blind advertisements that will protect the confidentiality of the business. The type of business and the types of buyers we are targeting will drive the actual marketing mix. We currently use local newspapers, yellow pages, trade publications, buyer database, and many internet sites. We also have relationships with organizations that refer buyers to us to include the SBA’s SCORES group. In many situations buyers find us, many buyers do not know what type of business they are interested in buying and we can present your business to these buyers. We interview new buyers on a daily basis to insure an appropriate match for the businesses we represent.

 

How long does it take to sell a business?

Unlike real estate where there are several choices of the same type of house in any particular geographical area, there is only one business like yours. It normally takes several months to find the right match and on average a small business will sell in 184 days. Many factors drive the process for finding the right buyer. Sales price, location, type of business, owner’s available compensation, down payment, financing, terms and conditions, and availability of buyers. The main reasons for not selling a business are; unrealistic asking price, low owner’s compensation and down payment. This is a down payment driven transaction. The more reasonable the down payment the larger the number of available buyers.

 

Will the owner need to finance a portion of the transaction when selling a business?

The majority of small to medium business transactions have some form of owner financing which is paid from the revenues of the business. Banks are reluctant to finance business purchases for several reasons. A major reason is that all small businesses attempt to minimize profits shown on financial statements to reduce tax liability. Also, a bank cannot come in and manage a business if foreclosure becomes necessary. Therefore, over ninety percent of business purchases are financed by the owner themselves, which demonstrates their confidence in the ongoing success of the business. The majority of the banks decisions to loan are based upon the strength of the business tax return. Your CPA and Gateway M&A representative can work together to determine the likelihood of finding a lending partner(s) using current tax strategies.

 

How are negotiations handled when selling a business?

All negotiations are handled at arm’s length through your Gateway M&A. The primary reason is to maximize the price you can get for your business, but just as importantly is to facilitate a smooth transition of the business under new ownership. All negotiations can be stressful and after you have closed the transaction you and the new owner will have a good working relationship to begin the transition period. Let Gateway M&A buffer any stressful negotiations. Our Gateway M&A Representatives have been trained are experienced in negotiating successful terms and conditions for the transfer of businesses.

 

What is the closing process when selling a business?

Gateway M&A will recommend using a professional closing officer to prepare documents and facilitate the closing process. This improves the efficiency of getting the business transaction completed. While you will sell your business only one time, the closing organization closes hundreds. The advantage of the closing officer is that they represent the transaction and the best interest of both parties. It is very difficult, time consuming and expensive if either the buyer or seller have their attorneys prepare the documents. Sunbelt strongly recommends taking all of these documents to a transaction attorney for review, edit and approval. Let your closing officer coordinate the process of getting lien searches, property tax settlements, bills of sale, escrow and closing instructions, non-compete agreements, offset agreements, security agreements, abandonment of assumed names, documentation of incorporation, settlement statements and the wide variety of documents which are specific to each different transaction. You should be able to prepare your business for the transfer while the closing officer is coordinating the preparation of the documents for the transaction.


Gateway Mergers and Acquisitions, LLC

1000 E. Belt Line Road
Suite 204
Carrollton, TX 75006
Phone: (972) 219-6961
Fax: (972) 242-2436

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