Selling FAQs

A: Some key questions to consider:

• Not just the seller, but is the family ready for a sale?
• If the seller steps out and the business fails, how will that impact the seller?
• If the company is sold so the seller can retire, will the proceeds from the sale support the seller's future?
• What will the seller do with their newly acquired time?
• What will the seller's spouse do when the seller is around the house all the time after the sale?
• Will the seller need a change of hobbies, scenery, or friends?
• Will a drastic change in daily routine affect the seller's health?

So many questions to think about, but you're not alone --- Grandworth can help prepare you mentally, physically, and financially.

A: For companies that sell in open market transactions, the answer is they will sell for whatever the seller and buyer agree to. More specifically, the asking price is the sum total of the value of the assets being sold.

Most buyers want to purchase a stream of future cash flow, and pricing a business based on future cash flow depends on many variables. To achieve this, we will analyze the variables and recommend an asking price that reflects a combination of the assets involved, the existing market conditions, and financing options for a buyer. We will make recommendations, but YOU will make the final decision on an asking price.

A: Our experience is anywhere from 2 to 18 months from the time it is listed for sale. Recent industry statistics show it can take anywhere from 1 month to more than 2 years, with an average of 6-8 months. It's useful to remember the old Boy Scout motto, "Be Prepared," for if a seller is unprepared, it can take an additional 3 years just to get ready to put the company on the market. We can help you with those preparations.

A: Selling a company, regardless of its size, is usually a complex task that requires at least two people - a seller and a buyer, but in some situations, it may involve a dozen or more.

A typical sale involves a BUYER (and his/her family) and a SELLER (and his/her family), two ATTORNEYS (one each for the seller and buyer), one or two ACCOUNTANTS, a BANKER (or maybe two), a WEALTH MANAGEMENT ADVISOR (or two), some SPECIALTY ADVISORS (i.e., a franchiser rep for the transfer of franchise rights), and a BOARD OF DIRECTORS if the company has one.

Having an experienced broker to manage such a complex project, someone who advocates for the seller in the process is a wise idea. A broker can provide specific expertise essential to addressing pertinent issues.

A: Important in the sale of any business is keeping quiet about the fact that it's for sale. Why? Because people may react in ways that don't help the seller. That's especially true of the employees (who might quit), and the customers (who might take their business elsewhere).

We maintain confidentiality by advertising the offering in the blind (no company identity is revealed) and by requiring all buyer prospects to complete a non-disclosure contract, a personal financial statement, and an interview with the broker before the identity is disclosed.

Grandworth has never had a breach of confidentiality.

A: Every buyer is obligated to verify all aspects of the business prior to sale, which is called "due diligence." It begins after a seller and buyer agree on a price and terms, and it involves a detailed review of all relevant facets of a company from its financial position to inventory, etc.

Due diligence can take 2-3 months and involve the buyer's accountant and other advisors.

Here is a sample of the due diligence process where you will find a selling guide that explains the selling process in detail, including due diligence. You can download the guide for free after you have created a free account.