Selling a Business: Frequently Asked Questions
- Do you recommend keeping the sale of my business confidential?
- What are the advantages of using a business broker or mergers and acquisitions professional to sell my business?
- I’ve been working with a buyer for months and now he has backed out. Can I sue him?
- How long does it take to sell a business?
- I want to sell my business to my employees but they don’t have the money. What can I do?
Who you tell about the sale of your business, and when, is up to you. Most business owners like to keep the sale confidential until closing to avoid losing nervous customers, suppliers, and employees. To maintain confidentiality, ask all prospective buyers to sign a Non-disclosure Agreement or Confidentiality Agreement.
What are the advantages of using a business broker or mergers and acquisitions professional to sell my business?
Using a business intermediary has many advantages. Your intermediary should be able to help you manage the entire process, guiding you through the many steps that have to be taken. Intermediaries may know of potential buyers, understand how to market businesses, and are able to quickly eliminate tire-kickers so you don’t waste your time.
A business intermediary is also useful during negotiations, particularly if you are not comfortable with the negotiation process. And, of course, the intermediary can meet with buyers at his or her office, helping you keep the sale confidential.
Probably not. The buyer made an offer and you agreed to work with the buyer, but the Letter of Intent or Offer to Purchase is not necessarily legally binding. If it is not, either party can stop negotiations at any time.
The time it takes to sell a business varies, depending on the size of your business and a number of other factors. Typically, the entire process can take 3 months to a year. You can help speed up the process by being thoroughly prepared.
Talk to your advisors about an Employee Stock Ownership Plan. These have many tax benefits and can be used whether you sell all or part of the company to your employees.