A glimpse at the selling-your-business process
"Absolutely you can sell your business on your own," says Linda Purcell. "But if you try to stay focused on running your business (so it shows well to prospective buyers), you might miss a buyer. Or," she adds, "if you focus on finding a buyer, your business might suffer.
"It's a bit of a conundrum."
Eric Lundstrom is more direct. "If you want to get the most from the business, you need an intermediary," he says. "If the goal is to sell quietly to a friend, OK. Otherwise, you need someone who creates a discrete private auction" - i.e., a bidding contest for your business.
Their styles differ and there are other brokers, but Lundstrom and Purcell are two respected business brokers with the same goal: To help you sell your business. I asked them about the process.
• Lundstrom, president of Focus Capital Advisors Inc., Downers Grove: "We start by gathering all the information. We look at tax returns; three years of financial statements; budgets and forecasts, so we know what the bottom line impact will be to the buyer.
"We interview the client (seller). We want to understand the unique qualities of the business. Niche markets? Dealerships?
"We also look for things that could be a problem. Customer concentration. Products nearing the end of their life cycle.
"We're looking not just for the good but for what could trip a deal up."
• Purcell, principal of Purcell Associates LLC in Palatine: "I need to talk with the owner, to understand the business, how it's run. What he, or she, wants to accomplish with the sale.
"I spend time with the financials. What does this line item represent?
"Will management stay in place? Most buyers want key people - those employees who literally are producing the sales - to stay. The seller knows the employees and will know how to align them (with a new owner)."
Lundstrom prepares a one-page teaser, or flyer, to send to prospective buyers. "We begin work on the profile book," which includes financials and a narrative about the business, he says. "We research our database. Who would be the best buyer?"
Interested buyers sign a confidentiality agreement that gives them access to a secure website that contains data about the business.
Ultimately, or perhaps hopefully, at least one interested party will send Focus a letter of intent that outlines an offer and requests the business be taken off the market for 90 days while the possible buyer does due diligence.
"Owners want to find a buyer who will be successful taking over the business," Purcell says. "Many owners ask, 'Will my legacy go on? Will the buyer do right by my customers?'"
Purcell uses targeted mailings and the Internet to seek "exposure (for the business) without breaching confidentiality."
She looks for the "right buyer," cautioning, however, that "The right buyer is not always the one with the biggest checkbook."
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