Selling Your Business? Read this true story....



The following story is true. I’ve eliminated the names and some details to protect the privacy of the business owner.  While I’ve written this story as a letter, I didn’t actually mail it. However, I am publishing it here because it is important, if as a business owner, you want to maximize the value of your business when you sell.

As a business owner, it is likely that you have built your business from the ground up.  You've invested a considerable amount of energy, money and time to develop and grow your company.  And it's quite possible that you've experienced setbacks and challenges along the way causing you to falter or even consider shutting down.  I know this…..and that’s why I want the best for you when you are ready to sell.

Why do I care so much? Perhaps it’s because I grew up in an entrepreneurial household. I didn’t realize it as a child but looking back, I see the risks my dad took to leverage his assets and “bet” on his own abilities, stamina, intuition, and hard work. It paid off but there were times when it wasn’t easy to make do with what we had or go without because there was not yet a profit.

I’ve spent my entire career working with business owners because I admire the grit and determination it takes to start, grow and succeed. Exiting your business the right way at the right time with the right guidance can make all the difference for all your years of hard work.  Please read on....

Dear Business Owner,
I met someone a few weeks ago who told me that she just listed your business and commercial real estate for sale. Now while she didn’t mention you or your business by name, she revealed enough details about your business that I recognized it was yours. She has no idea that I know you. She probably doesn’t realize that revealing these details could impair the sale of your business. Heck, it might even reduce your business value if your employees or competitors find out through the grapevine. Since I figured out it was your business, they may be able to as well.

However, please don’t get upset with her. She’s not experienced or educated in selling businesses. She is a residential real estate agent. Selling residential real estate is a great profession and requires a certain set of skills, education, and personality. However, selling a home is nothing like selling a business. In fact, selling commercial real estate is not the same as selling a business. These are very different kinds of transactions with different knowledge requirements, experience, training and skill sets.
So that’s why I’m writing to you because I’m concerned that your business is not going to sell at all…. let alone for the right price. During my conversation with your agent, I explained that:

“A business broker has the tools, education and experience to assist the seller in determining and understanding the value of his or her business. We do this by recasting financial statements, doing a valuation, preparing a confidential offering memorandum, creating marketplace demand by finding qualified buyers, arranging financing with the right lenders, and guiding a team of professionals through the negotiation and closing process. Why don’t we work on this together and I’ll pay you a referral fee?”
She turned the offer down perhaps thinking of her commission and not about your best interests. I wish you and I had talked earlier. I could have shown you the value that a business broker brings to a business sale transaction. However, I understand there are other reasons you selected her to sell your business, since she is related to your son’s mother-in-law and is a very nice person. While it is generous to do business with family, it may make things strained during holiday dinners if things don’t turn out like you hope.

Oh, and one last thing…after your agent shared some of your business details with me, she also mentioned that you needed a higher price than the amount that she and her residential broker had determined. So she asked me the best way to get you the sales price you really need. And she wanted to know how to calculate that “special formula” to determine the business value too.
I’ll check back with you in a couple of months to see how things are moving along. In the meantime, I sincerely wish you the best of luck. If I can be of service, please don’t hesitate to contact me.

Respectfully yours,

Sheila Spangler
Business Intermediary & Advisor

 If you are thinking about selling your business, want to know what it’s worth or how the business transfer process works to maximize your "walk-away number", talk to a professional business broker.   There is no cost or obligation for a complimentary consultation. You can reach me at s.spangler@murphybusiness.com or phone 208-286-2300.

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