Selling out sooner than I thought.

[Woodsrider]

I am 49 years old and had with out putting anything on paper thought that I could retire around 53. Last year my wife and I started looking at the numbers and I have come to the conclusion that I can retire now if I sell my business. She just started with a new company and is in a key roll for them so we both agree she should give them 2 or 3 years to get them where they need to be and have a replacement for her trained and ready to take over. I am in the process of listing my business with a broker now. He told me that the average is 9 months.

I was fine until all this started but now I can't stop thinking about this and tomorrow is not soon enough. I think it would be difficult to make it another 9 months as distracted as I am but I guess most of us have to go through this at sometime. Does it get any better?

 

[Teacher Terry]

I think that the time before it sells it will give you time to adjust to the fact that you will retire. Most people are anxious to have their freedom but you are still young in the big scheme of things)

 

[pb4uski]

Its not much different from selling a house... you want to make whatever effort is required to make it shipshape and attractive to get the best offer... but you already know that.

 

[DanP]

You don't say the type of business but often not quite as simple as selling a house.

Post basic negotiations the due diligence period, working capital adjustments and lingering escrows can be significant, and you chose to list through a broker, there will be other likely legal and transaction fees.

Not bursting your bubble and congrats on your first step, just don't underestimate the road ahead.

 

[aja8888]

Selling businesses is generally a lengthy and complicated event, as mentioned above. Depending on the business, the new owners may want key individuals to sign an employment contract for a few years. Better find you an attorney that specializes in these kind of transactions.

 

[pb4uski]

My post wasn't suggesting that selling a business was like selling a house though I concede that I worded it poorly... I realize it is more complicated that that since I worked in M&A.. but the OP was expressing difficulty keeping focus on the business since he put his business up for sale and I was suggesting that he needs to maintain focus on keeping the business good until the sale... if he lets the business slip then it will diminish the value of the business just like neglecting keeping a house for sale in good condition will adversely impact the value of the house.

 

[DanP]

... if he lets the business slip then it will diminish the value of the business just like neglecting keeping a house for sale in good condition will adversely impact the value of the house.

Excellent point.

 

[OldShooter]

... Does it get any better?

Probably not. BTDT. You lose the motivation to stay the extra hour, make the extra phone call, and take the extra selling trip. ...

But, consider this: There is no time that extra efforts will be more richly rewarded than when they affect the selling price. You're not just trying to get a few more bucks on this year's P&L, you are almost certainly working with some kind of multiplier driving the sale price. So try not to let up.

Don't let up even if it looks like you have a deal. You think "I'm really on the home stretch now." But deals bubble. I had two of them bubble before I finally got my business sold.

When negotiating the sale, if you are a charitable sort you might benefit from consulting a tax expert. You might be able to protect some of the proceeds by creating a family foundation or other vehicle from which you could do your charitable deeds in future years.

Good luck!

 

[Woodsrider]

The business is tire and automotive. I have picked a broker and checked references on him. Right before I listed it with him, I checked with the previous owner and he wants to buy it. It should be a good deal for him because I will take what I was going to pay the broker off the price. I have already had the business and real estate SBA approved. Now it is an issue of appraisals, valuations, credit, and down-payment.

I will do my best to keep my focus.

 

[pb4uski]

Why don't you split the broker fee 50/50?

 

[OldShooter]

Why don't you split the broker fee 50/50?

Because it is a lot of money, best kept in @Woodsrider's pocket.

@Woodsrider, did you exclude this buyer in the broker listing contract? Hopefully you did, as I think most of those contracts obligate you to pay the broker even if you sell it yourself to someone the broker has not found. If not, you may have to delay the sale date to the day after the contract expires and have a lawyer review the contract carefully for gotchas.

 

[pb4uski]

You didn't read the previous posts, the OP was going to take the entire broker commission off the price for the buyer. What I was suggesting puts the OP/seller in a better position!

From the post the OP wrote before it sounds like the OP has not yet listed it with a broker when the former owner expressed an interest in buying it back.

 

[OldShooter]

You didn't read the previous posts, the OP was going to take the entire broker commission off the price for the buyer. What I was suggesting puts the OP/seller in a better position!

Yup. Missed that. You're right.

From the post the OP wrote before it sounds like the OP has not yet listed it with a broker when the former owner expressed an interest in buying it back.

Yes, but that may not protect him from having to pay a commission.

 

[pb4uski]

Perhaps, but if the broker doesn't have a signed contract or in any way facilitated the sale to the previous owner it would be an uphill battle to make a successful claim that he was due a commission on the sale.

 

[OldShooter]

Perhaps, but if the broker doesn't have a signed contract or in any way facilitated the sale to the previous owner it would be an uphill battle to make a successful claim that he was due a commission on the sale.

We're both ignorant of the actual facts. Any listing contract I have ever been involved with requires that the commission be paid regardless of who sells the asset unless the buyer was specifically excluded by name at the time the listing was signed. Not facilitating the deal has nothing to do with it. And a seller who is working with an excluded buyer cannot expect much effort from the broker unless/until the excluded deal bubbles.

 

[pb4uski]

No, you're choosing not to accept the facts that we know... read post 9 by the OP... he says "right before I listed it with him".... suggesting that there is no contract.

 

[Debinnov a]

Yes, sounds like he hasn't actually signed a broker contract. If it is to be an SBA Loan, be prepared for a slow process.

When I sold my business it was six months from letter of intent to closing.

Sent from my KFTHWA using Tapatalk HD

 

[Woodsrider]

I have not listed with the broker.

Debinnov - 6MTHS!!!! Please tell me that this is not normal. I have concerns about this guy being able to qualify as it is. I am doing some stuff on the side to help him with the down payment. I feel obligated to give him a shot at it but think I would make more money and the deal would be smoother with some one else. However, he is a potential buyer and he is here now. I was told the average listing time was 9 months.

 

[OldShooter]

I have not listed with the broker. ...

Good. I read it that you had. Six months sounds long to me but I have not sold SBA. IIRC there is a class of banks where they can approve their own loans and another class where SBA has to review everything prior to issue. That might be something to ask about.

 

[Debinnov a]

Yes, six months! My buyer went through a large bank that is a highly preferred vendor for SBA, which I was told makes it a bit easier/smoother? They require a lot of paperwork and due diligence. There were no real glitches, just a long process. Some back and forth between our attorneys (but mostly waiting for the bank to move forward on each step.) I did my best to facilitate, and get my due diligence done quickly.

Good Luck and I hope your transaction goes smoothly!

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[Woodsrider]

Time for a update. The original owner that I was trying to sell to was unable to pull it off. So I am listing with the broker. Like someone said above, it is somewhat like selling a house. Now my ER is in the hands of someone that I don't even know.

 

[1-31-18]

Time for a update. The original owner that I was trying to sell to was unable to pull it off. So I am listing with the broker. Like someone said above, it is somewhat like selling a house. Now my ER is in the hands of someone that I don't even know.

I'm an M&A lawyer. Most businesses of any size are bought by buyers that the sellers don't know. That's why intermediaries exist. The sales get done, or not, depending on the strength of the business, the industry of the intermediary in finding prospective buyers, the perception of value in the eyes of the buyer, the willingness of buyer and also of seller to agree upon terms, the skill of the lawyers in negotiating and documenting the inevitable compromises, the availability of financing for the buyer, and satisfaction of other conditions such as (in some cases) government approvals.

It's a well-traveled path. If you are working with professionals who know what they are doing and if you have a realistic sense of the value of your business, then you have an excellent chance of getting a deal done in the current economic environment.

 

[Woodsrider]

I am out! The previous owner had some things change on his end and offered me my asking price but 100% owner financed. The broker let us buy out the last month or so of the contract so the new owner could be in for the best month of the year. I have worked with him all week. He trained me 7 years ago and this is his 4th location so there was not much to show him. I am amazed at how good of a salesman he is. He is way better at making money come in than I am but my strength was stopping it from going out, so my year end profit has always been higher than his.
Yesterday was my last full day and today I catch a plane to the Caribbean.

 

[whatnot]

Woohoo! Congrats!

 

[albireo13]

Yowzah. Everyday is Saturday !!!!!