Seller Frequently Asked Questions

How long does it take to sell my business?

This depends a lot on your business. In the segment we serve (businesses with revenues of $1 million to $25 million) we find that 6-18 months is typical range. Although some deals might take less time, it is not uncommon for deals to take much longer due to the complexity of the deal and/or limited number of buyers.

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Why don’t I use my lawyer or accountant to sell my business?

Having a lawyer and accountant that understands the complexity of selling a business is an absolute necessity. Some lawyers and accountants have helped an owner sell. However, in our experience, we have found that having a lawyer or accountant sell your business is fraught with risk and in some cases can put a professional in position of conflicting roles. For example lawyers may not have access to a broad range of buyers or an accountant might not be able to manage the complexities outside of their discipline (i.e managing legal issues). Most importantly your accountant and lawyer needs to be looking out for you and your interests. As a result, this often pits the selling team against the buying team. A business intermediary is truly that, someone who intermediates between all the parties.

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How do I protect my confidentiality with my customers, suppliers and employees?

This is one of the most significant concerns of business owners. Handling a business in a discrete and confidential nature is a key practice of our business. We have unfortunately seen the consequence of this being mishandled. Our process for screening buyers and our Non Disclosure Agreements (NDA) are as stringent as possible to minimize this risk. We also manage the due diligence process that requires sharing of sensitive information with key stakeholders. An intermediary will manage this process and the risks for you to minimize the impact on your business.

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Someone contacted me and said if I give them my financials they will make an offer on my business?

STOP, don’t go there. There is much more to your business than the financials. There is value in your customers, your business processes and your knowledge. Also, there are ways to look at the financials that help paint the true value of your business. For example how to consider owner benefits like cars, travel and family pay. Most importantly, before anyone looks at your financials you need to make sure they are qualified and under non-disclosure.

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What does it cost to use an intermediary?

There are two basic structures to engaging an intermediary. One is fully contingent where the intermediary is paid a percentage of the final sale price when the business closes. In this scenario the intermediary is not paid anything upfront, or maybe a small signing fee. The other structure is an upfront fee plus a percentage. In this scenario, the business owner pays a larger up front fee, $10,000-$50,000 depending on the deal size, and a much lower percentage. Generally, use of an intermediary will more than pay for the cost because they help you realize a higher sale price: much more than the fees you might pay to an intermediary.

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How much can I sell my business for?

Because this is a free market, you can only sell your business for what someone is willing to pay for it. Now that we have stated the obvious, the reality is your business has multiple prices depending on the profile of a specific buyer and the type of buyer. For example a company that sees strategic value might pay more than an individual that needs to have a specific income from the business. One of the key roles of your intermediary is to help create your price strategy. In some cases we recommend that the seller have a valuation by a certified valuator. A valuation can also be very insightful for a buyer who might be looking to sell down the road. Although NorthCoast does not provide valuation, we do have recommendations for affordable and professional valuations. We often help companies engage valuation companies to make sure that the complete picture is presented to these experts.

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