10 Tips to Obtain Top Dollar for the Sale of a Business
By Scott Bushkie, CBA, M&AMI
Cornerstone Business Services


For most business owners the sale of their business is a once in a lifetime event.  If you are thinking of selling, you want to make absolutely sure that for all the hard work and sacrifices you have made, you get the absolute “top dollar” for your business. At the same time, most business owners are unprepared for this new process.  Their concerns are how do I sell my business, who will pay me top dollar for my business and where will I find the time?

According to an article published in the Green Bay Press Gazette on September 3 of this year, Americans work the longest hours.  “Now Americans work almost a month more than the Japanese and almost three months more than Germans.”  Imagine the hours you, the owner, work above the average employee.  Now add to that the several hundred hours for a complex selling process, a process you are doing for the first time.  How will you find the time to do all this without compromising the value of your business and maintain confidentiality that your business is for sale?

This explains the growing trend to use a business intermediary to help a business owner sell his/her business.   

Here is a “TOP 10” list of tips to help make the experience a positive and profitable one.  These are based on my research and experience in over 30 business transactions.

1. Prepare for the sale well in advance.  Be sure your records are detailed and complete for at least the last three years.  Do all necessary legal and accounting housekeeping (i.e. make sure profits are easy to find—bottom line—not tied into misc. expenses) Also, spruce up the physical assets of the business.

2. Anticipate information the buyer may request.  To obtain financing, the buyer will need appraisals on all assets and satisfaction with any environmental regulations that may apply.  The more information you have available upfront to the buyer, the less “unknowns” to the buyer (less perceived risk) which creates a higher purchase price.

3. Carry on business as usual.  Don’t dwell on the sale and ignore the day-to-day activities.  Your eventual buyer will need to see a healthy business, not one suffering from neglect.  Allow the intermediary to do his or her job as you would allow your attorney to handle a lawsuit.

4. Be reasonable about the value of your business.  Inflated expectations interfere with your business intermediary’s ability to negotiate the best value for you.  If you have unrealistic values for your business, you have a high probability that the business won’t sell.  Consequently it will become “shop worn,” as a house does after sitting on the market for several months, and there is little hope of getting “top dollar” at that point.

5. Keep the sale process strictly confidential.  A breach of confidentiality concerning the sale of a business can dramatically negatively affect the sale process.  Any potential purchaser must sign a confidentiality agreement.

6. Achieve the highest price through buyer competition.  Allow your intermediary, as a third party, to create a competitive situation with buyers to position you for the best transaction value.  You need to have a detailed proven process in place with a good transaction team from the time you decide to sell, to create this auction-like environment.

7. Keep time from dragging down the deal.  Keep the momentum up, work with your intermediary, your accountant, your lawyer and other experts in business transactions that may be required to be certain potential buyers stay on a time schedule and the offer moves in a timely fashion. (It is vital your team, i.e., accountant, attorney etc. have adequate experience in business transactions.)

8. Be flexible.  Don’t be the kind of seller who will accept only “all cash at closing”, or won’t do an asset sale, or won’t look at a contingent payment if structured correctly.  Look at each offer and judge it on its merits as a whole.

9. Negotiate, don’t dominate.  You are used to being your own boss, but the buyer may be as well.  With your intermediary’s help, decide when to hold and when to fold.

10. Be willing to stay involved.  Even if the process has been exhausting (the end is near) realize that the buyer may want you to stay within arm’s reach for awhile.

Remember these tips as you plan to sell your business.  Above all, remember a professional intermediary has the time, networks, resources, proven marketing plans and detailed processes in place to not only sell your business but to get you the “top dollar” you expect and deserve.  Consult with your intermediary to determine how you can achieve a positive and smooth transaction.

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