Keeping the Sale of Your Business Confidential

Keeping the sale of a business confidential is most commonly the number one concern for business owners. Employees may become worried about the security of their employment, and clients may become concerned about quality and service.  

Business brokers specialize in confidentiality. Every business they sell is a confidential transaction. A broker acts on your behalf allowing you to remain anonymous. It’s important to maintain confidentiality.

When should you tell your employees about the sale? 

 Our considerable experience has proven that it is best to tell your employees about the sale after the sale is complete. Of course, if there is an employee whose expertise will be needed after the sale, you should introduce the buyer to this employee shortly before closing.

We have found that once employees find out that the business is for sale, they often just assume that their position will be replaced with the new owner’s personnel. However, this is far from the truth. Current employees are a wealth of knowledge. After the transaction has occurred and the seller is no longer there, employees become a real asset to the business. It usually is best if employees are introduced to the new owner right after closing the sale. This enables the new owner to tell about his background and to take time to assure the employees of their value and that no one is going anywhere– all without distressing anyone.

If you have a business you would like to sell, please contact our office at 250-751-7917 or toll-free 1-877-289-0969.  We will be happy to discuss how we can meet your goals as a seller while maintaining confidentiality.

Pros of Seller Financing: Getting More For Your Business

As baby boomers begin to hit retirement age, many who are business owners are ready to sell. It’s created a market that has many businesses for sale. At the same time, concerns about the economy had made it tough to get financing for many potential deals. Seller financing is one option that could be the solution to get many deals done.

There are a number of benefits for business owners who are considering seller financing:

• Faster sale – Seller financing provides an attractive option for buyers which means that sellers can sell their business quickly.
• Flexibility – Seller financing enables the seller to create a payment schedule, interest rates and loan period that fit their personal needs. 
• Tax breaks – Taking a note for part of the business purchase price may provide a tax break for the seller. The seller can defer some of the tax due on the sale of the business until full payment is received, which could be several years down the road.
• Protections – Asking the new owner to keep the seller up to date with information like monthly profit and loss statements, workforce numbers, order backlog, inventory levels or other items with the monthly payment can be in the sale contract. The additional information allows the seller to keep track of the business and step in to offer advice or help if any problems are detected. 
• In First Position to Be Paid:  If SBA is not in the picture you are in 1^st position if there would be a default.  We encourage a personal guarantee from the buyer to ensure you being paid.

Working with a qualified business transaction professional, like a Certified Business Broker (CBI) or Mergers & Acquisitions Master Intermediary (M&AMI) is also recommended. Certified brokers and intermediaries at Sunbelt BC Business Brokers can provide the guidance you’re looking for when considering seller financing or other financing options.

The Benefits of Buying vs. Starting a Business

So you want to be your own boss.  Consider the options – starting your own business vs. buying an existing company. 

Starting a business of your own can pay great dividends, but it’s important to understand that the risks are significant.  According to Michael Gerber, author of The E-Myth Revisited, 40 percent of new businesses fail in the first year and 80 percent fail within five years.  

On the other hand, purchasing an existing business reduces an entrepreneur’s risk while creating opportunities for tremendous profit. 

 There are a number of reasons to consider the purchase of an existing business rather that starting one: 

• Risk.  An established business with strong cash flows is far less risky than a startup.
• Branding. The ongoing benefits of any marketing or networking the prior owner has done will transfer to the new owner.
• Proven Concept.  A business with a track record is more likely to qualify for credit.  A bank can rely on historical financials, not just projections.   
• Key Personnel.  The employees have already been trained and assimilated into the company culture. You will have an easier time implementing growth strategies. 
• Focus.  The seller has already laid the foundation and taken care of the time-consuming, tedious start-up work. You can focus on improving and growing the business immediately.
• Goodwill/Relationships.  You will have an existing customer base and vendor base that took years to build.  It’s very common for the seller to transition with the business for a short time to transfer those relationships to the buyer.   
• Cash flow. Typically, a sale is structured so you can cover the debt service, take a reasonable salary, and have some left over to take the business to the next level.  On the other hand, start-up businesses aren’t expected to profit for the first three years.

Becoming your own boss always involves a risk.  When you buy a business, you take a calculated risk that eliminates a lot of the pitfalls and potential for failure that come with a startup.  “Working for someone else is trading time for money, but doesn’t build equity. As an entrepreneur, you are the master of your own destiny.”

Source: IBBA website