Selling your business is a major decision! You have devoted your time, money, and energy to building, running, and operating your business. It may as well represent your life’s work. You have decided that now is the right time to sell, and you want the very best professional guidance you can get.
Working in tandem with a licensed restaurant broker can make the difference between just getting rid of the business and selling it for the very best price and terms! The following are some of the most common questions asked by sellers.
What can restaurant brokers do – and what can’t they do?
Restaurant Brokers are the professionals who will facilitate the sale of your business. It is essential that you understand what a restaurant broker can do and what they can’t. As your broker, we can help you decide how to price your business and how to structure the sale to make sense to everyone – you and the buyer.
We can find the right buyer for your business, work with you and the buyer in negotiating, and coordinating every step of the way until the transaction is successfully closed. We will also help the buyer in all the details of the business buying process.
A restaurant broker is not, however, a magician who can sell an overpriced business. Most restaurants are sellable if priced and structured correctly. You should understand that only the marketplace can determine what a business will sell for.
How long does it take to sell my business?
It generally takes on average three to twelve months to sell most restaurants. Keep in mind that an average is just that. Some businesses will take longer to sell, while others will sell in a shorter period. The sooner we have all the information needed to begin the marketing process, the quicker the time.
It is also vital that the business is adequately priced right from the start.
Some sellers, operating under the premise that they can always come down in price, overprice their business. This theory often backfires because buyers often will refuse to look at an overpriced business.
The amount of down payment can be a key factor in a quick sale. The lower the down payment, generally 30% of the asking price or less, the shorter the time to a successful sale. A reasonable down payment also tells a potential buyer that the seller has confidence in the business’s ability to make payments.
Why is seller financing so important to the sale of my business?
Surveys show that on average, a seller, who asks for all cash, receives only 70% of their asking price, while sellers who accept terms receive 86% of their asking price. That’s a difference of 16%! In many cases, businesses listed for all cash just don’t sell.
With reasonable terms, however, the chances of selling increase dramatically, and the time from “listed” to “sold” decreases significantly. Most sellers are unaware of how much interest they can receive by financing the sale of their business. In some cases, it can dramatically increase the amount received. Again, it tells the buyer that the seller has enough confidence that the business can pay for itself.
What happens when there is a buyer for my business?
When a buyer is sufficiently interested in your business, we will help prepare an offer or proposal. This offer or proposal may have one or more contingencies. Usually, they concern a detailed review of your financial records. They may also include a review of your lease arrangements, franchise agreement (if applicable), or other pertinent details of the business.
The buyer’s proposal will be presented to you for your consideration. You may accept the terms of the offer, or you may make a counter-proposal.
We will submit all offers to you for your consideration. At first review, you may not be pleased with a particular offer; however, we advise you to sift through it with a keen eye. It might be lacking in some areas, but it may also have some pluses worthy of serious consideration.
As the age-old adage says, “The first offer is generally the best one the seller will receive.” This does not mean that you should necessarily accept the first or any offer – just that all offers should be looked at carefully.
When you and the buyer are in agreement, we will work with both of you to satisfy and remove the offer’s contingencies. It is critical that you cooperate fully in this process. You don’t want the buyer to think you are hiding anything. The buyer may, at this point, bring in outside advisors to help them review the information.
When all the conditions are met, final papers will be drawn and signed. Once completed, the closing money will be distributed, and the new owner will take possession of the business.
As your restaurant broker professional, we will help you throughout the entire sales process.
What can I do to help sell my business?
You can cooperate fully with us and any other professionals that you are using. Being prepared prior to and during the sale of your business is a key advantage. A buyer will want up to date financial information. If you use accountants, you can work with them on making current information available. Just as crucial as having up-to-date financial information, it is equally important that you keep up with your business’s operation.
Don’t make any significant staffing changes, keep it tidy, and try to keep your head in the game. Some owners check out after they list, and that lack of involvement shows when buyers peek behind the curtains.
Finally, your team of advisors must be working towards the common goal of selling your business for the best price and terms available in the marketplace, and closing the sale as quickly as possible! Remember that as your professional restaurant broker, we are on your side. Only by being as cooperative as possible with us can we best handle your business interests. Transparency and trust are key!