By Bruce Pockrandt, CBI
Managing Broker, Truforte Business Group
If you’ve never spoken with a business broker, you may assume the first conversation means you’re committing to sell your company.
It doesn’t.
At Truforte Business Group, the first conversation is about understanding you, your business and what you’re trying to accomplish.
You may be ready to sell.
You may be thinking about selling two years from now.
You may simply want to know what the business is worth.
All are reasonable reasons to start a conversation.
Before talking about marketing, we need to understand the situation.
Why are you considering a sale?
Retirement?
Burnout?
Health?
Relocation?
A new opportunity?
Partnership issues?
Or are you simply planning ahead?
Your objectives affect the strategy.
An owner who needs to exit quickly has different options from someone with five years to prepare.
Expect general questions such as:
What does the company do?
How long have you owned it?
Where is it located?
How many employees do you have?
What role do you play?
How does the company generate customers?
Is revenue growing?
Are there recurring customers or contracts?
Do you own or lease the property?
Why would someone want to buy this company?
This isn’t an interrogation.
We’re trying to understand what you’ve built.
Eventually, value is connected to financial performance.
For an initial conversation, we may discuss approximate revenue and earnings.
To develop a more meaningful Opinion of Value, additional documentation will normally be required.
That can include several years of tax returns, profit-and-loss statements, balance sheets and information concerning assets and legitimate adjustments.
The better the information, the better the conversation about value can become.
One of the most important questions is:
What do you actually do in the business?
Are you working 60 hours per week?
Ten hours?
Do you handle sales?
Manage employees?
Perform technical work?
Or does a management team run most daily operations?
This helps us understand transferability and what a buyer may need to replace after you leave.
You do not need a firm sale date.
But timing matters.
If you’re thinking about selling in five years, the conversation may focus on building value.
If you’re ready now, we may discuss valuation, preparation and the sale process.
Sometimes the conclusion is that the owner should not sell yet.
That’s useful information too.
An Opinion of Value helps establish a reasonable expectation of what the business may sell for in the current marketplace based on financial performance, industry, comparable information, assets, risk and other relevant factors.
It isn’t based on how much you need to retire.
And it isn’t simply whatever asking price sounds good.
The objective is to understand how buyers may view the business.
Then you’ve learned something extremely valuable.
If you’re years away from selling, you may have time to improve the company.
Maybe earnings need to increase.
Maybe customer concentration is too high.
Maybe the company depends too heavily on you.
Maybe financial records need improvement.
Maybe recurring revenue can be developed.
Learning those things early can be much better than discovering them after you have already decided to retire.
Confidentiality is fundamental to business brokerage.
Exploring a potential sale does not mean announcing to employees, customers or competitors that your business is available.
The initial discussion can be handled privately.
If you eventually decide to proceed, confidential marketing and buyer screening become part of the process.
That depends on you.
Possible next steps might include:
There is no reason to force the process before you’re ready.
I frequently tell business owners that you don’t need to be ready to sell to talk with a business broker.
In fact, an early conversation may be more valuable because you still have time to act on what you learn.
If your business is one of your largest assets, wouldn’t it be helpful to understand what it may be worth?
And if you’re not happy with the answer, wouldn’t you rather know while you still have time to change it?
That’s where the conversation starts.
Related reading: How to Sell a Business in Florida: A Step-by-Step Guide and requesting an opinion of value.
No. Owners can begin the conversation while planning for a future sale or simply trying to understand their options.
Basic information about the business is enough for an initial conversation. More detailed financial records will generally be needed for a meaningful Opinion of Value.
An initial consultation can be handled confidentially. Confidentiality remains an important part of the process if you later decide to market the company.
An initial conversation is intended to help you understand your situation and options. Discuss any specific engagement terms with your broker before deciding whether to proceed.
Contact Truforte Business Group to discuss the company and the information needed to prepare an Opinion of Value.
Bruce Pockrandt, CBI, Managing Broker of Truforte Business Group, helps Florida business owners understand the value of their companies and prepare for the confidential sale of privately held businesses.
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Wondering what your business is worth—even if you’re not ready to sell? Contact Truforte Business Group at 239-284-1317 to start a confidential conversation.