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Things to Know Before Buying A Business – A Buyer’s Perspective

GETTING READY

FROM THE BUYER’S PERSPECTIVE

In the previous chapters, we talked about sellers who are in the process of considering a sale. The focus in this chapter starts instead with the BUYER, and then moves on to look at the big picture aspects of the PRICE.

A critical question worth repeating as we move on to rules for buyers is: Do you really have a willing seller? Or, is the seller so emotionally tied to the business that no buyer will ever actually be good enough to pass muster? Is the seller reluctantly willing to sell — but only if the price/terms are unrealistically high?

Potential sellers should think these things through very carefully before spending a lot of everyone’s time and money on a seemingly desirable deal that is unlikely to actually take place.

Once it becomes apparent to you as a potential buyer that the seller is not really ready to sell, then it’s time to politely walk away. Don’t burn your bridges though; the seller may very well be more ready at some point in the future and you can resurrect the deal at that point. Just don’t waste time and money before the overall timing is right.

Buyers

The following rules are presented from the buyer’s standpoint, but sellers should be acutely aware of these things too:

First:

The first rule for buyers is: Know what YOU are looking for. Buying a business is risky, expensive, and a LOT of work for the buyer. Do your homework first.

*Not every business is worth the same to you as it is to other potential buyers.

  • What business would fit the best with what you already own?
  • What can YOU bring to the table to enhance its value after the purchase?

In other words, what business can you buy that will result in a 1+1 = 3 scenario? (or even 4?)

  • This is so important, that if the resulting effect of 1+1 is not more than 2, then perhaps you should not buy it at all.

Second:

Another rule for buyers is: YOU are for all practical purposes “selling” yourself personally and/or your existing company to the seller at this point as well. That’s because if you really want to buy that target business, someone else probably does also. It’s about a lot more than just price and terms.

So, why should this seller sell to YOU?

*Be ready to sell yourself and/or your company as the most appropriate buyer for that particular business.

  • The seller is almost always looking for a buyer he or she feels comfortable with personally and believes will take proper care of the business, its employees and its customers post-sale.
  • If you fail this unspoken test, you can lose the opportunity before you ever get to issues such as price and terms.

Third:

The third rule for buyers: Be ready.

Be ready financially — a strong balance sheet, good banking relationships, and enough uncommitted cash flow with which to do the transaction are essential. Be ready with your own time — if your time is already fully committed, how are you going to handle the additional management burdens?

Fourth:

Another rule for buyers: Consider the basic steps in a business sale.

  • Is there a business broker involved, and if so, on which side does their allegiance lie? Which party pays the commission? If I as the seller sign a listing agreement, can I get out of it, and how long does it last? What if I bring the buyer to the table myself, do I still owe a commission to my broker under an “exclusive right to sell” agreement?
  • Can or should both sides use the same attorney or C.P.A. in order to save professional fees?
  • Should you sign a confidentiality agreement up-front? At what point?
  • Will this deal be seller-financed in whole or in part, or do I need to get a banker on-board early and see if financing is available beyond what cash I have for the down payment?
  • Am I willing to personally guarantee all or part of my company’s promissory Note to the seller for the balance of the purchase price, or to pledge additional collateral?
  • How much cash will I need for working capital until the cash flow situation in the new business settles down following closing?
  • Do I need a business valuation, and if so should it be a full-blown appraisal or just an opinion letter? Will my banker require an appraisal in order to loan me the down payment or all of the purchase price as the case may be?
  • What role does a letter of intent (an “LOI” or “terms sheet”) play? What kind of LOI should you create? Should it be binding on both parties or non-binding, or should only portions of it be binding?
  • Will the seller request a good-faith cash deposit up-front, perhaps paid into escrow? Refundable or non-refundable?
  • What due diligence is needed, and when, and should the other party pay part of the cost if they back out prematurely for no good reason?
  • What contracts are likely to be needed, and which side should have the subtle advantage of drafting first and controlling the documents (customarily the buyer, since it has the most risk in how the transaction is structured and written up)?
  • What should you expect at closing?
  • Will an independent third-party professional escrow be necessary for the eventual closing?

Fifth:

The fifth rule for buyers: Know the legal basics.

  • What are the crucial legal distinctions between an “asset sale” and a “stock sale” that will determine the overall structure of the entire deal?
  • What additional risks do I effectively assume if I buy the stock of the seller’s corporation, as opposed to buying the assets out of that corporation and thereby shedding most of those risks?
  • What to do with the employees?
  • What about a non-compete agreement with the seller entity as well as the individual owner(s) thereof, or with key employees of the target business who might leave following closing and go right into competition with the very business you just paid a lot of money for; or
  • Does the target company already have those crucial non-competes in place with key employees, and if so are they enforceable and transferable?
  • You need to know the basics, but you will definitely need professional help to get this right.

Sixth:

Another critical rule: Know the tax basics!

  • If I personally buy the company’s stock from the seller, I’ll have no tax deductibility on the purchase price. Does that matter to me, or would I rather have that higher tax basis and thereby pay less tax when I re-sell the company sometime in the future?
  • Or, should I have my own company buy that same stock instead? Can my corporation or LLC buy stock in another without causing serious tax consequences?
  • Am I comfortable with the hidden or unknown risks in this industry or this particular company that come along with a stock purchase format, including the risk of prior taxes unpaid or under-paid by the target corporation; or do I want to insist on an asset purchase format instead and thereby try to “shed” most of those potential liabilities? Can I mitigate that risk by having the selling stockholder indemnify me for all or part of those taxes, interest and penalties, or even other unknown and/or unexpected exposures?

Never forget, there are three parties to every business sale — the seller, the buyer and the IRS. A sale can be a lose/lose/win (guess who the losers are… ); or, the same sale can be re-structured to constitute a win/win/lose. If there is a “loser” in this deal, you want it to be the IRS.

  • The taxes on sale of a business can exceed 50% of the total sale proceeds if the sale is structured wrong!
  • The seller can even end up owing more to the IRS at the front end than he receives as the down payment from the buyer… a particularly unfortunate (and generally avoidable) result of poor tax planning.
  • You don’t need to be a tax expert; but you do need to know there are ways to mitigate this kind of tax disaster and also be able to point the seller in the right direction for professional help.
  • You need to be willing to work with the seller to resolve what may be critical issues to the success of the sale.
  • You need to know the basics, but you will need professional help to get this right.

Seventh:

The seventh rule for buyers: Know how to use your own professional advisors, and when to bring them into the picture (earlier is better, even up to a year or more under some circumstances).

  • CONTROL your professionals in order to keep expenses down and prevent them from killing your deal. It’s YOUR transaction, not theirs. Get advice from them, but do not let them renegotiate the sale.
  • Keep relationships cordial. You will almost certainly need help of some kind from the seller after the sale closes, so don’t let your professional advisors poison that well.

MOST IMPORTANTLY: The most important rule for buyers (and for sellers too for that matter): The sale must be perceived as a “win” on both sides. In most cases, neither side is compelled to do the transaction. If either side concludes that the sale is a “lose” for them, then the deal is likely off at that point.

Special Situations

Some special situations will be covered in more detail in later chapters but deserve a brief mention now:

Internal Sales

Many business owners would love to sell their company to their key employees, but they don’t think it’s possible. The most frequently cited reason is “but they don’t have any money.”

You work with these key employees every day. You probably already know they have the basic talent to run the business, or you would not even consider selling to them. They may already have been running it for many years already from a practical standpoint. Only money seemingly stands in the way.

The fact is, the money issue can almost always be handled to everyone’s satisfaction. The REAL key issue is instead, “Do they have the fire in the belly, and the risk tolerance, to be an entrepreneur?”

The heart of an entrepreneur is an intangible that can’t really be measured or pinned down; but if your key employees have what it takes to be one, then you can probably arrange win/win terms that work financially for them and give you a better long-term after-tax price than you could receive from an outside third-party sale.

As always, YOUR expectations need to be reasonable. Just as with a third-party sale, the price and terms must “pencil-out” for the buyers in any internal succession. The down payment is likely to be less, and the seller financing will probably run for more years. Terms are likely to include a way to split the fruits of future success.

We’ll discuss this more in subsequent chapters, but suffice it to say that if your key employees have what it takes to succeed after you are out of there, then internal succession can be your best exit strategy financially. It can also be an excellent way to attract and retain top-notch employees with an expectation of participating in the buying group and a way to ensure a satisfactory sale of your business when the time is just right in the future.

Family Sales

Family sales are a particularly difficult kind of internal sale. All the usual considerations of internal succession apply, plus uniquely complex tax considerations.

The IRS is deathly afraid parents will do something nice for their children. So an entire chapter of the tax code is devoted to making sure the IRS gets its “fair” share (they consider about half the total value of the business to be “fair”). Needless to say, this adds to complexity.

Intra-family dynamics can be even more complex. Just because a child has the talent, does not mean that he or she has the experience to run the business. And talent + experience still do not mean the child has the intangible heart of an entrepreneur. Even establishing the price can be more difficult than in an arms-length sale since a child can find negotiating with a parent over price and terms to be essentially impossible.

Price

What about “Price”?

Ultimately, the “Price” must be justified by (i) the future cash flow the buyer can reasonably expect from the acquired business, and (ii) the risk the buyer must take in order to receive that cash flow.

But “Price” is much more than just money to a seller. It can even be seen by him or her as a reflection of their individual worth as a person. A buyer overlooks this only at their great peril.

Starting the conversation with comments designed to push down the price can be fatal to an emotional negotiation like this. You are not haggling over the price of a car here. “It will have to pencil-out, of course, but it’s probably worth quite a bit…” is often a good starting point comment for you as a buyer.

Emphasize creating a “win/win” transaction overall. Remember, the seller most likely does not HAVE to sell, and likewise you do not HAVE to buy. As soon as either party perceives the transaction to be a “lose” for them, the sale will die.

An emphasis on AFTER-TAX cash to the seller is also extremely helpful. Thanks to our overly-complex tax laws, it is often possible to restructure a sale with a lower stated “price”, but more actual after-tax cash for both the seller and the buyer.

An “all-cash” deal is low risk for the seller, but much riskier for the buyer. Therefore, the price is almost always significantly lower in an all-cash transaction in order to compensate for this mismatch in the risk area.

What about payment terms?

Terms are not as emotional, but in a practical sense can be even more important than price. In fact, your authors are fond of saying “The price is not the price… terms are everything!” Terms determine how the sale will “pencil-out” for the buyer. For example, seller financing over a period of 10 years is much easier for the buyer to pay for out of ongoing cash flow from the business, and thus justifies a higher price.

Terms can also dramatically affect taxes for both sides. Since it only counts if you get to keep it, this consideration alone can be more important than price.

Terms affect the risk for both sides. Terms so stiff that the sale cannot possibly pencil-out will obviously raise the risk for the buyer. Less obvious, the seller may incur more risk from draconian terms like this as well. An upside down buyer is much more likely to look for an excuse to rescind a sale or some way to sue the seller for misrepresentation or a breach of the seller’s representations and warranties in the purchase and sale agreement.

Terms can be massaged to share the risk, thus lowering the effective risk for the buyer. Lower risk translates to a higher price. It is fairly common for part of the price to be dependent on future results and retention of business (called a partial “earn-out”), which is a great way to share risk and reward.

Other factors will affect the price as well. For example, do key employees have, or can you create at closing, enforceable non-competes (see our later chapter entitled NON-COMPETES)? What about major customer accounts? Will key vendors terminate their contracts when the “founder” of the business is no longer around?

What about the building occupied by the company? Does the target company’s owner also own that building? Is the Lease transferable, and/or how much longer will it run? Are there any options to extend or to buy the building and not have to incur major expenses in moving the entire business later on? Is the business owner a personal guarantor on that existing Lease, and will the landlord release him or her from that guarantee at closing or simply execute a brand new Lease with the new owner? Is rent likely to be raised post sale?

Finally, it’s not all about “Price” anyway. Price certainly matters; but is rarely the key to a sale.

A seller is likely to have other “hot buttons” that can make or break the deal. Some are obvious, such as how key employees will be treated post-sale in all respects. The seller may want to see to it that a couple of his “pet” long-term employees are retained for a number of years at the buyer’s expense.

Other hot buttons can be quite unusual. Your authors well remember a sale that hinged on providing a parking space on company property for the retiring seller’s yet to be purchased RV. The buyer initially balked, which would have killed the sale. It has been many years now since the closing, and the seller never did quite get around to parking his RV in that spot that seemed so crucial to him at the time.

Business Traveller Flying to London? A London City Guide for Getting to the Centre

London. The vibrant, beating heart of the United Kingdom. It’s one of the world’s most popular destinations for tourists, and for business travellers too. The amount of commerce that goes through London is staggering, with a financial centre second only to New York, and service industries that cater for both the UK, European and international markets. As the world’s most multicultural city – there are over 300 languages spoken by a population of over eight million people (twelve million if you include the metropolitan area) – the opportunities for business are clear.

With the UK strategically positioned for the business traveller on the western edge of Europe, London is a global hub for air travel, providing easy access to mainland Europe, and a stepping stone to the United States. Primarily served by five airports – Heathrow, Gatwick, City, Stansted and Luton – London is easily reached from anywhere in the world. But with the exception of London City Airport – smallest of the five and located in East London, close to the business district of Canary Wharf – the other four airports are satellites evenly dispersed around the city. The most popular, Heathrow, is located to the west of London; Gatwick is situated to the south; Stansted to the north east; and Luton to the North West. Knowing this before you make your travel plans can be useful. Since the greater metropolitan area of London covers over 1,000 square miles, your final business destination may not be right in the centre. Researching which airport is closest to your destination can save you time, effort and money.

However, whether you’re a business traveller flying from within the UK or from overseas, your starting destination may often determine the airport you arrive at. Other factors, such as your chosen time of travel, budget and availability will also make a difference. For example, if you’re travelling with a major international carrier from a major city, such as New York, the chances are you’ll arrive at Heathrow or Gatwick (Stansted also receives flights from New York but is the smallest of the three). If you’re travelling locally from within the UK with a budget carrier you’re more likely to arrive at Stansted or Luton (though not exclusively). And if you’re travelling from a major European city, particularly a financial capital, such as Frankfurt, London City Airport is a likely arrival point (the airport was created specifically to cater for short haul business travellers, particularly between financial centres).

Each airport is served by comprehensive rail and road infrastructure, providing business travellers with a variety of options to enter London. All five airports offer direct rail travel into the heart of Central London, coach travel to the main Victoria terminus, and hire car, mini-bus, licensed black cab and taxi services by road. If you’re a VIP business traveller, chauffeur services are also available, and with the exception of London City Airport, each also offer direct helicopter transfer into the heart of the city.

London Heathrow Airport

The busiest of the five airports is London Heathrow. Located less than twenty miles from central London, Heathrow is situated to the west of the city within the M25 motorway metropolitan boundary. The fastest route into London is via the Heathrow Express train service, taking just 15 minutes from terminals 1, 2 and 3 to Paddington station (located on the western side of Central London). If your flight arrives at either terminal 4 or 5 it’s a further four and six minutes travel time respectively, and you’ll need to transfer on to the main London-bound service at terminals 1, 2 and 3.

The service is excellent, offering comfort and convenience, but does not always suite everyone’s travel budget. The standard ‘Express’ single journey ticket costs £21.00 (€25.00 / $35.00), but business travellers can get better value when purchasing a return ticket, priced at £34.00 (€40.00 / $56.00). The ‘Business First’ ticket is more expensive, with singles costing £29.00 (€35.00 / $48.00) and returns £52.00 (€62.00 / $86.00), but it does afford business travellers considerably more leg room, the privacy of a ‘single seating’ layout, and a fold out table. The experience is akin to that of air travel. All passengers across both pricing structures enjoy access to electrical sockets, USB ports and free Wi-Fi. The overall quality of service and passenger experience generates a ‘wow’ factor, and if your budget can afford it, is certainly the smoothest, quickest and most convenient way to travel into London from Heathrow. Trains run regularly every fifteen minutes in both directions, particularly useful for last minute dashes to the airport.

There are two further rail options available to business travellers, both considerably less expensive, though this is reflected in the quality of service. That’s not to say either is not a good solution for business travellers, just that there is a noticeable difference in convenience and comfort.

With a service typically running every thirty minutes, and a journey duration – depending on the time of day – of between 23 and 27 minutes from terminals 1, 2 and 3, Heathrow Connect is more than adequate for business travellers who are not in a hurry. Like the rival Express service, Connect also arrives at Paddington station, but unlike its faster rival stops at up to five other stations before reaching its terminus. The ‘inconvenience’ of this less direct journey is compensated for by a considerably less expensive ticket price. Single journey’s cost £9.90 (€12.00 / $16.00) while a return is £19.80 (€24.00 / $32.00). There is no saving to be made from purchasing a return ticket. While the convenience and comfort of the traveller experience cannot match the Express, the Connect business travel solution is an acceptable compromise that suits a greater number of travel budgets.

The third – and least expensive – rail option is the London Underground ‘tube’ network. Despite the network’s name the majority of the journey from Heathrow is overground, until the business traveller nears Central London. Starting on the Piccadilly Line, the service connects all five Heathrow terminals and provides frequent trains into London, stopping at a considerable amount of outlying stations before arriving in the capital’s centre. This continually ‘interrupted’ journey – there are seventeen stops between Heathrow terminals 1, 2 and 3 and Paddington Tube station (the nearest equivalent tube terminus for a fair comparison) – and takes approximately fifty minutes journey time on average, considerably slower than its more direct rivals. This journey comparison also requires the inconvenience of a transfer between lines.

So why would the business traveller consider using the tube from Heathrow to Central London? Simple. The frequency of service, the array of destinations, and the cost. At a cash price of just £5.70 (€6.80 / $9.50) for a single journey in either direction during peak hours (06:30am to 09:30am), financially the Underground is an attractive option. At nearly half the price of the Heathrow Connect, and at just over a quarter of the price of the Heathrow Express, this service is comparably good value for money. Further value can be found if the business traveller purchases an ‘Oyster Card’, the ‘cashless’ electronic ticketing system beloved by so many Londoners. Available to purchase at Heathrow London Underground stations, this useful option allows you to get tickets cheaper than for cash – in this case a reduction to just £5.00 (€6.00 / $8.30). Off-peak travel with an Oyster Card offers even greater value, with Heathrow to Paddington in either direction costing just £3.00 (€3.60 / $5.00) per journey. The Oyster Card can also be used for unlimited travel on buses and trains throughout London, with a maximum daily spend capped at £17.00 (€20.00 / $28.00) peak time and just £8.90 (€10.60 / $15.00) off-peak for a six zone ticket (destinations across London are divided into six main zonal rings. Travelling from Heathrow to Central London crosses all six zones).

The Underground is primarily a city-wide mass transit system, rather than a ‘train’ service. As such the level of comfort and convenience is substantially less than that of both the Heathrow Express and Connect services, and at peak hours can be considerably uncomfortable. Having endured a recent flight, business travellers who choose this option run the risk of having to stand up the entire journey if travelling during peak hours. If the carriage is full to squeezing point (as is often the case at peak time) managing your luggage can be a challenge. It should also be noted that the tube network – which, as the world’s first urban mass-transit system is over 150 years old – is often prone to signal failures and delays. If the time between your arrival at Heathrow (don’t forget to factor in clearing immigration control, luggage collection and customs) and your business appointment is tight, particularly during peak hours, it is not unfair to say that you are taking a risk if you choose to use the Underground.

Compared to using rail, travelling by road into Central London is far less convenient. Like every major city around the world, traffic congestion plagues the streets of London. The M4 and A4 route from Heathrow into London is always busy and in parts can be slow moving at times. No matter what your method of road transport, the business traveller is vulnerable to the risk of delays and accidents.

Buses and coaches are plentiful. The dominant carrier is called National Express. They operate services between Heathrow Airport and London Victoria, the main coach terminus in London. From here travellers can travel to many other destinations around the UK. The coaches run from Heathrow Airport Central Bus Station, which is located between terminals 1, 2 and 3. Its well sign posted so easily found. If you’re arriving at terminals 4 or 5 you’ll need to first take the Heathrow Connect train to the central bus station. From Victoria Station you can get to any other part of London with ease, via the Underground, plentiful buses, local trains and licensed black cabs / minicab taxi services.

A single journey tickets start from £6.00 (€7.20 / $10.00), while returns cost £11.00 (€13.20 / $18.00). Although you can purchase your ticket at Heathrow, it is advisable to do so in advance, and online. This will ensure you have a guaranteed, reserved seat on your coach of choice, and also provide you with the opportunity to select a time of departure and/or return that best suits your needs. Typically this service runs three coaches per hour to and from London Victoria coach station. The journey time can vary, dependent on the route taken, the time of day and traffic conditions, but you can typically expect your journey to take between 40 and 90 minutes.

National Express also offers business travellers a Heathrow hotel transfer service to and from the airport, known as the Heathrow Hoppa. With hundreds of services each day running around the clock, it’s a clean, comfortable and affordable way to get about, costing £4.00 (€4.80 / $6.60) for single journey and £7.00 (€8.40/ $11.50) for a return journey. This service is particularly useful if your business appointment is located close to Heathrow and you have no need to travel into Central London.

An alternative to coach travel is taking a bus. This can be particularly useful if you arrive at Heathrow late at night. Depending on the day of the week, the N9 night bus runs approximately every 20 minutes to Trafalgar Square in Central London, from 11.30pm to 5am. The journey time is approximately 75 minutes, subject to traffic delays. It’s a very affordable service, and as part of the Transport for London infrastructure a single journey can be paid for with an Oyster Card (£1.40 (€1.70/ $2.30) or by cash (£2.40 (€2.90/ $4.00).

If your journey into London requires the freedom to choose to travel whenever you want, to wherever you want, or you simply require privacy, then private hire transport is readily available at Heathrow. If you’re just interested in getting from A to B and back again, without any other journeys in between, taking a licensed black cab or minicab taxi may suit your needs. Travelling in an iconic licensed black cab into Central London will take approximately 45-60 minutes, subject to traffic delays, and can typically cost between £50.00 (€60.00/ $83.00) and £80.00 (€96.00/ $132.00). If you do find yourself delayed in traffic the journey will cost more, since black cab meters also charge for waiting time when not moving. Black cabs are readily available at all hours, and good sign posting at Heathrow means they’re easy to find. At a squeeze up to five business travellers can be accommodated, though if you all have large luggage it will be a problem.

An alternative private hire to black cabs are licensed taxi services. This could be a better option for the business traveller, particularly if a number of people with luggage are travelling together. An array of vehicle types are available, ranging from standard 4/5 seater saloon and 6/7 passenger people carrier cars, up to 15 or 17 seater minibuses and even coach taxis. An added advantage is you can book your vehicle of choice in advance and at a fixed price. With so many different companies offering these services, prices – and quality of service – can vary, but typically for a single journey the business traveller can expect to pay a fixed, advance price of £40.00 (€48.00/ $66.00) for a saloon car; £50.00 (€60.00/ $83.00) for an estate car; £55.00 (€66.00/ $90.00) for an executive car; £55.00 (€66.00/ $90.00) for a people carrier; £65.00 (€78.00/ $108.00) for an 8 seater minibus; £80.00 (€96.00/ $132.00) for an executive people carrier; and £165.00 (€198.00/ $272.00) for a 16 seater minibus. Savings can be made on all tariffs if a return journey is booked in advance.

Travelling by black cab or licensed taxi affords the business traveller the freedom to travel at his or her own pace, and can take the hassle out of a journey. It can be a very relaxing way to commute from the airport into London, particularly after a long flight, and offers the business traveller an opportunity to unwind prior to their business appointment.

If you need to arrange senior executive or VIP transportation, chauffeur driven services are readily available (booked in advance) between Heathrow and London. The vehicle type and the length of time you require it for will dictate the price you’ll pay. Chauffeur driven services are readily available to find online. The same is true of helicopter charter services which can transfer the executive business traveller from Heathrow into Central London (Battersea Heliport) in approximately 15 minutes. Flightline Travel Management is experienced at providing our customers with both modes of transport, and we’re happy to take your enquiry.

© Copyright Flightline Travel Management Ltd. All rights reserved.

All prices correct at time of publication.

Selling Your Own Business, A New Approach

Until maybe just a few years ago, selling your business was considered a taboo. Traditions defined that the son must follow the footsteps of his father, and join the family business. But with changing trends in the mentality of people, the business environment, and the constant need to create something bigger and better, the stigma is vanishing quickly, and selling business is no longer looked down upon.

Being new to the idea of business selling, sellers often make some basic mistakes, forcing them to sell the business at a lot less than what it is worth, or in worst cases, shut it down without getting any return on investment. Traditionally sellers will try with their own contacts (limited reach and confidentiality issues) and talk to people that they want to sell their business. This often provides limited reach and also it creates situation where the word soon gets out that business is for sale, and it can greatly decrease employee morale, and might provide advantages to competitors to bash the seller company, and gravely affects the future scope too.

Other factors: Sellers generally wait too long to SELL, timing of selling is equally important. Sellers also generally lack any proper exit strategy; good paper work and clean financials. All of these are mistakes that can affect business selling. With everything turning up on the Internet, it wasn’t long before selling business made its way to the there, and this is where buying and selling businesses found a new approach. It also helps overcome the drawbacks of manual selling. Internet provides what print advertisement (newspaper or journals) or word of mouth cannot provide: the secrecy/privacy, the reach, the specific target audience, and all of it at low cost.

Going through Google AdWords Keyword Research Tool, it was found that there were more than three lakh monthly searches to buy or sell business with common search phrases like ‘business for sale’, ‘business for sale ‘, and ‘businesses for sale’ getting monthly searches between 10,000-60,000. That turns up to about 10,000 business buying and selling searches per day! The statistics make it perfectly clear that there is no shortage to the people interested in selling or buying businesses. Social media plays a huge role in establishing network and connections of people interested in buying or selling a business, and these connections form the database of buyers and seller that can be later used to find interested parties quickly.

Putting up advertisements on the Internet is similar to putting up advertisements in a newspaper or journal: it needs to be visible. A small ad will be missed by most. But in newspapers or journals, the more visible the ad, the steeper its price gets. This is again where Internet shows a considerable advantage with features like Search Engine Optimization (SEO). SEO plays a huge role in making specific ads visible to more likely buyers or sellers, and that leads to quicker selling of business at a great price.

This entire approach of putting your business on sale online has helped sell businesses much faster, and at a much better price than was previously thought. But again just by going online will not solve the conundrum for SME business sellers, they need proper guidance to navigate through this maze of business selling at profit. One has to be careful what where and how things are put online. Talk to companies who can help SELL your business, but before you decide, check out how they do it, what is their network, how they would promote your business for sale, how much they will charge, any hidden charges, what support will you get etc…