One of the biggest mistakes people make is choosing the wrong broker. There’s a wide disparity in skill, experience, and reliability in business brokers, so you need to make sure you choose the one which best represents your interests. Review resumes, ask for references and make sure to follow-up with references. Find out how long the broker has been with the firm and how much experience they have in selling businesses. Find out how many businesses they have sold, and how many sales-per-year they average. Many successful brokers average eight-to-ten businesses sales, yearly. Obviously, the more dealings they have negotiated, the more experience they have. The bottom line is: trust your instincts, and hire the broker you feel compatible with.
A strong relationship takes time, and effort, on everyone’s part. A business broker that understands both the client, and the client’s industry, will do a better job representing the client in the marketplace. You need to be sure your broker understands that he represents your interests – not the buyer’s. The broker should do everything possible to help you achieve the highest sale price. It’s critical that you are comfortable enough with your broker to speak honestly. Be certain they will speak open and honestly with you, and that you trust your broker’s advice. Early on, this strong, two-way relationship should be evident.
Every industry, has a unique knowledge base, and culture. The best brokers should have experience selling businesses in your particular trade, as well as in your price range. Without this knowledge, the broker’s pricing, and marketing efforts, may fall short of your sales objectives. Our offices specialize in the selling of businesses with revenue from $500,000 to $30 million in a large variety of industries. Your business broker should also be a trusted adviser in the community and respected by his peers. He or she should have an established relationship with lawyers, accountants, bankers and other local professionals.
The relationship you have with your business broker will be a lengthy one. From the time you and your broker evaluate your business, to the time the sale closes, can be from six-to-nine months, possibly longer. Your broker should ask questions to gain insight, and take an interest in learning the mechanics about each aspect of your business. Understanding your company’s strengths, and weaknesses, will prove invaluable during the negotiation stage. Here at Sunbelt, we spend the majority of our time with our sellers here at Sunbelt. This allows us to make sure we meet every one of your needs.
Having a real-estate license in California is a must. It forces brokers to understand state laws, and better their duties to you.
For additional information, contact Sunbelt Business Brokers, Greater Bay Area in San Jose.
Why A Business Broker Should Be Used?
A business broker, or intermediary, is a remarkably valuable asset when selling your business. They specialize in preparing, marketing and pricing your business for a successful sale allowing you the peace of mind to run your business throughout the process.
Each of our agents holds a high value towards honesty and reliability; many having been business owners themselves, making it easy for them to relate to this process. We understand how important it is to keep every sales transaction confidential so others will not discover your intent to sell prematurely. We value our professionalism, ethics and integrity, always remembering the Golden Rule, “Respect others, and treat them the way we would want to be treated.”
Your business broker at Sunbelt has taken the necessary time to learn the proper procedures in order to accommodate your every need, which is why our closing success rate is at 73%. That is 52% HIGHER than the national average! We make sure each agent only has a limited number of listings so that we are better able to provide you with the personal care that you not only need, but deserve. Being proactive in managing our listings is our focus. Rather than letting our listings sit on our website, we update finances quarterly and expedite mailings monthly.
Your business broker will first evaluate your business to help you find out what the business is worth and help you decide if anything needs to be changed in order to maximize the selling potential on the current market. If the time is right, we move forward in signing agreements and begin the process of packaging your business with the utmost confidentiality. Your listing will be posted on twenty-one web pages and potential business buyers will be targeted. Your business broker will be with you each step of the way to walk you through our seamless process. Sunbelt is known for specializing in businesses with revenue from $500,000 to $30 million in industries such as Manufacturing, Wholesale, Distribution and Business & Personal Services.
With 235 offices, Sunbelt is the largest brokerage/mergear acquisition company in the world and has access to the largest buying pool. We service geographical regions such as San Jose, Sunnyvale, Santa Clara County, San Mateo County, Santa Cruz County, south Alameda County, Campbell, and the entire Greater Bay Area. Each of the contacted buyers is financially capable and seriously interested in furthering their business acquisitions.
Business brokers are able to easily navigate through the complicated process of selling your business. Selling your life’s work is understandably emotional, and such sentiments can work against you during a sale. It usually takes six-to-nine months to sell a business. Allowing one of our experienced agents to assist you will help you achieve your financial sale goal while maintaining your peace of mind.
How Sunbelt Earns It’s Fees
Initial Seller meetings are conducted by the Seller’s Broker (a professionally trained Business Broker holding a California Real Estate Agent license), and the Seller is educated on the process of selling a business.
A Representation Agreement is filled out by the Seller’s Broker & signed by the Seller. Immediately after signing the representation Agreement, the Seller provides the Broker the following:
Complete lists of all equipment and other assets to be included or excluded in the sale;
Profit and loss statements, balance sheets, and tax returns of the Business covering the last three years;
The most recent interim profit and loss statement, balance sheet, and sales tax returns;
Real and personal property leases;
Copies of all patents, licensees, loan documents, contracts or agreements;
All agreements relating to employee benefits;
Any environmental reports; and
Copies of all other documents needed to present a fair and accurate description of the Business to prospective buyers.
During the representation period, seller will provide monthly updates of each such document during the period of this agreement where any material change has occurred. Seller consents to Broker publishing, advertising or distributing information about the Business to prospective purchasers and to cooperating brokers, and contacting landlords and any others regarding any of the information about the Business.
Seller’s Broker writes a narrative on the Business; the Representation Agreement is entered into the Sunbelt proprietary database, and a Business Profile is created. Seller’s Broker introduces the Business to all of our other brokers during the Wednesday morning Team meeting.
All other brokers match the Seller’s Blind Summary (SBS) against Buyers in their respective queues (Buyers who have previously been interviewed, signed a Confidentiality Agreement and filled out a detailed Buyer’s Profile); Seller’s Broker and Sunbelt Business Broker’s President plan an advertising strategy; and the SBS is added to over 21 web sites in such a manner so the general public cannot identify the business.
Buyers in queue and Buyers who have responded from the advertisements will have their backgrounds and finances evaluated to see if they are qualified Buyers. If qualified and after signing an NDA, Buyers will be shown a Business Profile or Confidential Business Review (CBR). If further interest is shown, the Seller’s Broker will arrange a meeting with the Seller.
If a Buyer wants to make an offer at a fair price, the Buyer’s Broker will write the offer and secure a deposit.
The Seller’s Broker will present all offers to the Seller.
Seller and Seller’s Broker will review the offer and decide whether to accept it or counter the offer. If Seller wants to counter, they can:
Sign the offer; check the counteroffer box on the offer and write-up a counteroffer.
Re-write the offer.
Once an offer is accepted, the Seller’s Broker will arrange a Seller/Buyer meeting where the Seller’s and Buyer’s Disclosure Statement is discussed, questions answered and the statement is signed by both parties.
Due diligence starts once an offer is accepted and the Seller’s and Buyer’s Disclosure Statement is completed.
If the due diligence proves the Business as represented, the Buyer signs the Conditions Removal.
If the due diligence did not prove the Business as represented, either the offer can be renegotiated or the offer will be cancelled & the Buyer’s deposit check will be returned.
If the due diligence proved the Buyer as represented (capable of managing the Seller’s business, financially capable and with good credit), the Seller signs the Conditions Removal.
If the due diligence did not prove the Buyer as represented, then the offer will be cancelled & the Buyer’s deposit check will be returned.
Once both the Buyer’s and Seller’s Conditions Removals are signed, the Seller’s Broker will open escrow or prepare to close the transaction.
Seller’s Broker secures answers and/or provides the following to insure a timely close:
Copy of the Representation Agreement
Copy of the Purchase Agreement and Counteroffers
Copy of both Conditions Removals
Copy of the EDD & sales tax number and if applicable, liquor license
Seller(s) name, address, (other than business address), Social Security number, sales tax number, copy of ABC license (if applicable) and federal tax number, if corporation.
Buyer(s) name, address, (other than Business address), Social Security Number, and federal tax number if corporation.
Secures the deposit check from Buyer.
Secures leases – amount of monthly rental, security deposit, assignment, new lease, etc.
Estimates closing date for closing, date of possession by Buyer and pro-ration date.
Investigates Insurance. Will Buyer assume Seller’s or acquire new?
Taxes – Requests the Seller’s property tax bill for pro-ration.
Investigates required licenses. Are they transferable?
If Buyer and/or Seller are a corporation – need names of the officer(s) authorized to sign and a copy of the Corporate Resolution authorizing the sale of the assets or stock.
How will purchase price be allocated?
Fixtures and equipment
Covenant not to compete
Liquor license, if applicable
Furniture, Fixtures & Equipment
Asset sale through an escrow company
Receives opening escrow instruction
Prepares Escrow Instruction
Obtains signatures and Deposit money -no escrow processing will start until the deposit check clears.
Orders Publication, Recording and
Notifies County Tax Collector (When
ABC involved, prepares ABC package).
Orders UCC, Tax Liens & Judgment Search for State and County.
Requests demands from existing lien holders.
Prior to the legal published closing date, does estimation of closing cost including estimated inventory and requests funds to close escrow from the Buyer.
Prepares closing instruction one day prior to close of escrow.
Obtains signatures on the closing instruction on the date of close of escrow.
Disburses money and paper work.
ABC License through an escrow company. Tax Releases required before the Seller can receive all of their proceeds:
Immediately upon opening escrow request a certified copy of Notice to Creditors of Bulk Transfer and Notice of Intended Transfer of Liquor License
Seller to sign off at the local ABC.
Buyer to pick up ABC package from the local ABC and make an appointment for an interview
Escrow company prepares ABC package for Buyer to take to the interview
Certified copy of Escrow Instruction
Certified copy of Notice to Creditors
Demand Note to replace cashier’s check or Promissory Note -Form 226
Notice is posted at the Business location for 30 days from the date of the interview
When all the terms and conditions are met and funds are deposited with escrow, escrow company will forward Form 226 to the local ABC; they then forward their package to Sacramento ABC (State office), and they transfer the license. From the time escrow forwards Form 226 to local ABC to actual transfer of the ABC license takes approximately 2-4 weeks.
Tax Releases required before the Seller can receive all of their proceeds:
Certificate of Payment of Sales and Use Tax from State Board of Equalization
Certificate of Release from Employment
Stock sale through either an escrow company or attorney. (The selling Broker is required to have a securities license with a Broker/Dealer)
Orders UCC, Tax Liens & Judgment Search for State and County
Arranges for signature changes on banking accounts, if applicable – name changes on liability accounts and preparation of new stock certificates.
Prior to the closing date, does estimation of closing cost including estimated inventory and requests funds to close from the Buyer
Obtains signatures on the closing instruction on the date of close
Disburses money, stock certificates and paper work.