Selling: Frequently Asked Questions

When working with Wellstone you receive the following and much more:

• Confidentiality
• Maximum exposure
• Pre-screened buyers
• Negotiating power
• Advertising & marketing expertise
• International and national co-brokering
• Pricing and financing knowledge
• Experience
• Proven results

The best time to sell is when a business is doing well. It’s best not to wait until after a business has peaked; the selling price can suffer. However, almost any business can be sold, even if it is not doing well, if the sale is handled professionally and priced correctly.

A company’s value depends on many factors- such as cash flow, asset values, financial history, condition of equipment and premises, favorable lease terms, competition, location, and the economy. By analyzing your business and comparable sales in your industry, your Wellstone Intermediary can advise you on the proper pricing strategy for your business. For larger businesses we recommend a third party valuation. Buyers are much more likely to pay top dollar for a business when documented evidence supports the asking price. Most financial institutions insist on a business valuation before they will consider financing

Confidentiality is the most critical issue in the sale of a business. Business sellers do not want their employees, customers or vendors to know that his business is for sale. It is also very important that any potential buyer prospect sign a Confidentiality Disclosure.

The time needed to sell your business depends on a great many factors, including the price of your business, the type of business, your willingness to finance all or part of the purchase price and market conditions. On average, it takes 8 to 12 months to find a buyer and consummate a sales contract. Obviously, reasonable pricing and flexible terms tend to result in faster sales.

It will be almost impossible to consummate a deal unless the lease can be transferred. Leases will have a clause that defines the landlord’s rights regarding transfer. Frequently the seller will be required to remain as a guarantor of the lease and often there may be a charge by the landlord for the transfer.

Generally, you will be expected to provide two weeks to two months of training in the business with equal time of telephone consultation. Remember, if you are financing any portion of the purchase price, you still have an investment in the business, so properly training the buyer is in your best interest.

Yes. Generally, the non-compete agreement covers the area from which your current customers are generated and the time period commonly equals the term of the financing you are providing to the buyer. For example, if your customers come from a 20 mile radius of your business and you are providing the buyer with a five year loan, you will be asked to sign a non-compete agreement for a five year period, covering a 20 mile radius from your business.

“The Market” makes the final determination of value. At Wellstone, we have experience in valuing almost any business. Our estimates of value are not “certified business valuations” although we can provide this service for a fee, however our experience and volume of comparable businesses allow us to give the business owner a very good estimate of value.

3 years of tax returns plus current year P&L and Balance Sheet. Good business records are very important in having a good sales price. This includes accurate financial statements and tax returns. However, we are used to working with businesses that may have less than adequate records.

Most owners find that the frustration, expense and time involved do not yield cost savings and many end up working with unqualified buyers. In fact, because they do not have access to a large number of qualified buyers, many owners end up selling their business for much less than they could have received by working with a well-established Intermediary. Plus, owners find it difficult to work directly with buyers while maintaining confidentiality. Selling a business is a specialized trade. Seek professional assistance when it comes to selling an asset as valuable as your business.