Seller FAQ
  How long will it take to sell my business?
  What can I do to help sell my business?
  What can Tower Hill Advisors do, and what can’t they do in selling my business?
  What happens when you have developed a buyer for my business?
  What is a Certified Business Intermediary?
  Why may seller financing be so important to the sale of my business?
  Why should I engage Tower Hill Advisors to sell my business?
   
   
  Buyer FAQ's
  Do I need an attorney
  How are businesses priced?
  What does it take to be successful in business?
  What happens when I find a business I want to buy?
  What is a Certified Business Intermediary?
  What is the real reason people go into business for themselves?
  What should I look for?
  Why should I buy a business rather then start one?
  Why should I go to a Tower Hill Advisors or another member of the International Business Brokers Association to buy or sell a business?
 

 

 

Q1. Do I need an attorney
A1. Once the parties have agreed to the framework of the sale, have negotiated the price, terms of the sale, and employment contract if any, it is advisable to have an attorney prepare or review the agreement of sale, and other legal documents. It is important, however, that the attorney you hire is familiar with the business buying process and is available to handle the paperwork on a timely basis. If the attorney does not have experience in handling business sales, you may be paying for his education. Tower Hill Advisors maintains a lists of attorneys who are familiar with the business buying process. An experienced attorney can be of real assistance in making sure that all of the details are handled properly.

However, keep in mind the fact that many attorneys are not qualified to give business advice. Your attorney will be, and should be, looking after your interests; however, you need to remember that the seller's interests must also be considered. If the attorney goes too far in trying to protect your interests, the seller's attorney will instruct his or her client not to proceed. The transaction must be fair for all parties. The attorney works for you, and you must have a say in how everything is done.

You have to make the final decision. That "leap of faith" between looking and actually being in business for yourself is a decision, that only you can make!
 
Q2. How are businesses priced?
A2. Generally, at the outset, a prospective seller will ask the business intermediary what he or she thinks the business will sell for. The intermediary usually explains that a review of the financial information will be necessary before a price or a range of prices can be suggested offered.

Most sellers have some idea about what they feel their business should sell for - and this is certainly taken into consideration. However, the business intermediary is familiar with market considerations and, by reviewing the financial records of the business, can make a recommendation of what he or she feels is what the market will dictate. A range is normally set with a low and high price. The more cash demanded by the seller, the lower the expected selling price; the smaller the cash requirements the higher the expected price.

Since most small business sales are seller-financed, the down payment and terms of the sale are very important. In many cases, how the sale of the business is structured is more important than the actual selling price itself. Too many buyers make the mistake of being overly-concerned about the full price when the terms of the sale can make the difference between success and failure.

An oft-quoted anecdote may better illustrate this point: If you could buy a business that would provide you with more net profit than you thought possible even after subtracting the debt service, and you could purchase this business with a very small down payment, would you really care what the full price of the business was?
 
Q3. What does it take to be successful in business?
A3. Certainly, you need adequate capital to buy the business and to make the improvements you want, along with maintaining some reserves in case things start off slowly. You need to be willing to work hard and, in many cases, to put in long hours. Unfortunately, many of today's buyers are not willing to do what it takes to be successful in owning a business. A business owner has to, as they say, be the janitor, errand boy, employee, bookkeeper and "chief bottle washer!" Too many people think they can buy a business and then just sit behind a desk and work on their business plans. Owners of small businesses must be "doers."
 
Q4. What happens when I find a business I want to buy?
A4. When you find a business, the business broker will be able to answer many of your questions immediately or will research them for you. Once you get your preliminary questions answered, the typical next step is for you to prepare an offer based on the price and terms you feel are appropriate. This offer will generally be subject to your inspection of the actual books and records supporting the figures that have been supplied to you. The main purpose of the offer is to see if the seller is willing to accept the price and terms you offered.

There isn't much point in continuing if you and the seller can't get together on price and terms. The offer is then presented to the seller who can approve it, reject it, or counter it with his or her own offer. You, obviously, have the decision of accepting the counter proposal from the seller or rejecting it and going on to consider other businesses.

If you and the seller agree on the price and terms, the next step is for you to do your "due diligence." The burden is on you - the buyer - no one else. You may choose to bring in other outside advisors or to do it on your own - the choice is yours. Once you have checked and approved those areas of concern, the closing documents can be prepared, and your purchase of the business can be successfully closed. You will now join many others who, like you, have chosen to become self-employed!
 
Q5. What is a Certified Business Intermediary?
A5. A Certified Business Intermediary, or CBI, is the designation awarded by the International Business Brokers Association ( IBBA ) to members who have satisfied the educational requirements, attained substantial transaction experience, and who conform to the ethical standards of the IBBA.

A CBI is an experienced, proven professional whose claim of competence is supported and documented. A CBI has the proven skills necessary to handle the marketing, negotiations and complex details involved in the purchase or sale of your business.

You can have confidence in the expertise of the CBIs at Tower Hill Advisors to look out for your interests in the transaction. See the testimonials from some of our recent clients on our "Done Deals" page.
 
Q6. What is the real reason people go into business for themselves?
A6. There have been many surveys taken in an attempt to answer this question. Most surveys reveal the same responses, in almost the same identical order of priority. Here are the results of a typical survey, listed in order of importance:

...to do my own thing, control my own destiny,

...don't want to work for someone else,

...to better utilize my skills and abilities,

...to make money.

It is interesting to note that money is not at the top of the list, but comes in fourth.
 
Q7. What should I look for?
A7. Obviously, you want to consider only those businesses that you would feel comfortable owning and operating. "Pride of Ownership" is an important ingredient for success. You also want to consider only those businesses that you can afford with the cash you have available. In addition the business you buy must be able to supply you with enough income - after making payments on it - to pay your bills. However, you should look at a business with an eye toward what you can do with it - how you can improve it and make it more productive and profitable. There is an old adage advising that you shouldn't buy a business unless you feel you can do better than the present owner. Everyone has seen examples of a business that needs improvement in order to thrive, and a new owner comes in and does just that. Conversely, there are also cases where a new owner takes over a very successful business and not soon after, it either closes or is sold. It all depends on you!
 
Q8. Why should I buy a business rather then start one?
A8. An existing business has a track record, and should have a cash flow. The failure rate in small business is largely in the start-up phase. The existing business has demonstrated that there is a need for that product or service in a particular market. Financial records are available along with other information on the business. Most sellers will stay and train a new owner during a transition and many will also supply financing. Finding someone who will teach you the intricacies of running a business and who is also willing to finance the sale can make all the difference.

Interestingly enough, much of what is discussed in the previous paragraph can be accomplished through the purchase of a franchised business. For many first-time business owners the security of a successful franchise can be the fastest and safest way to financial independence. Tower Hill Advisors has the expertise to introduce you to a variety of franchise opportunities that have been tracked for their success in concept, training and operational support, and for their profit generation ability for their franchisees. Don't dismiss the opportunity for a franchise, they are real businesses with wonderful prospects for many first-time buyers.
 
Q9. Why should I go to a Tower Hill Advisors or another member of the International Business Brokers Association to buy or sell a business?
A9. Tower Hill Advisors is a member in good standing of the International Business Brokers Association, and the M&A Source, an international network of business intermediaries specializing in the sale of middle-market companies.

Buying or selling a business is one of the most crucial financial transactions of your life. As a business owner, you probably have or will have a good portion of your assets in your business. When the time comes to buy or sell a business you need the best representation possible. In what can be a confusing and sometimes difficult process, it pays to leave as little to chance as you can. With the help of a professional intermediary, you can navigate unknown territory with ease.

Tower Hill Advisors can provide you with a selection of different and, in many cases, unique businesses to consider. Although it is helpful to know your general criteria in a business acquisition keep an open mind. Approximately 90 percent of those who buy businesses end up with something completely different from the business that they first inquired about.
 
Q1. How long will it take to sell my business?
A1. It generally takes Tower Hill Advisors, on average, between three to eight months to sell most businesses. Keep in mind that an average is just that. Some businesses will take longer to sell, while others will sell in a shorter period of time. The sooner you have all the information needed to begin the marketing process, the shorter the time period should be. It is also important that the business be priced properly right from the start.

Some sellers, operating under the premise that they can always come down in price, may overprice their business. This theory often "backfires," because buyers may refuse to look at, or bid on, an overpriced business. It also has been our experience that the willingness of the seller to provide some financing to creditworthy and qualified buyers can be the key ingredient to a quick sale at a higher price. The lower the down payment required, generally 40 percent of the asking price or less, the shorter the time to a successful sale. A reasonable down payment and the sellers willingness to accept financing also tells a potential buyer that the seller has confidence in the business's future and its ability to make the payments.
 
Q2. What can I do to help sell my business?
A2. A buyer will want up-to-date financial information. If you use an accountant, you can work with them on making current information available.

If you are using an attorney, make sure they are experienced with the business closing process. The attorney you use for family estate, real estate transfers etc. may not be fully experienced in business transaction law.

You might also ask if their schedule will allow them to participate in the closing on very short notice. If you and the buyer want to close the sale quickly, usually within 60 days of an agreed Letter of Intent, you don't want to be delayed by the attorney's schedule.

We can make referrals to a number of transaction attorneys who have worked well with us in the past. Time is of the essence in any business sale transaction. The failure to close on schedule permits the buyer to reconsider, or to make changes in the original proposal that could be to your detrement.
 
Q3. What can Tower Hill Advisors do, and what can’t they do in selling my business?
A3. The professional intermediaries of Tower Hill Advisor will facilitate the successful sale of your business.

It is important that you understand just what a professional business intermediary can do -- as well as what they can't.

They can help you decide how to price your business and how to structure the sale so it makes sense for everyone -- you and the buyer.

They can find the right buyer for your business, work with you and the buyer in negotiating every step of the way until the transaction is successfully closed.

They can also guide the buyer in all the details of the business buying process.

A business intermediary is not, however, a magician who can sell an overpriced business. Most businesses are saleable if priced and structured properly. You should understand that only the marketplace can determine what a business will sell for at any given time.

The financibility of the transaction is extremly important in properly pricing the business and in the ultimate success of the sale itself. If the business can not attract reasonable financing terms at the asking price it most likely will not sell without seller financing or a reduction in the price.

In seller financing the amount of the down payment you are willing to accept, along with the terms, can greatly influence not only the ultimate selling price, but also the success of the seller ultimately receiving the full payment.
 
Q4. What happens when you have developed a buyer for my business?
A4. When a buyer is sufficiently interested in your business they will be requested to submit an offer in writing; generally referred to as a Letter of Intent. This offer or proposal may have one or more contingencies. Usually, they concern a detailed review of your financial records and may also include a review of your lease arrangements, critical contracts, and other pertinent details of the business.

You may accept the terms of the offer or you may make a counter-proposal. You should understand, however, that if you do not accept the buyer's proposal, the buyer can withdraw the original offer at any time.

At first review, you may not be pleased with a particular offer; however, it is important to look at it carefully. It may be lacking in some areas, but it might also have some pluses to seriously consider.

All points, from the buyers perspective as well as from the seller’s, should be negotiable if both parties have a serious interest in a fair transaction. All offers should be looked at carefully for areas of agreement and for points that can be negotiated.

When you and the buyer are in agreement, both should work to satisfy and remove all contingencies. It is important that you cooperate fully in this process. You don't want the buyer to think that you are hiding anything. The buyer may, at this point, bring in outside advisors to help them review the information, generally referred to as the “due diligence” period.

When all the conditions have been met, final papers will be drawn and signed. Once the closing has been completed, money will be distributed and the new owner will take possession of the business.
 
Q5. What is a Certified Business Intermediary?
A5. A Certified Business Intermediary, or CBI, is the designation awarded by the International Business Brokers Association ( IBBA ) to members who have satisfied the educational requirements, attained substantial transaction experience, and who conforms to the ethical standards of the IBBA.

A CBI is an experienced, proven professional whose claim of competence is supported and documented. A CBI has the proven skills necessary to handle the marketing, negotiations and complex details involved in the sale of your business.

You can be assured of the expertise of the CBIs at Tower Hill Advisors to look out for your interests in the sales transaction. See the testimonials from some of our recent clients on our "Done Deals" page.
 
Q6. Why may seller financing be so important to the sale of my business?
A6. Surveys have shown that a seller, who asks for all cash, receives on average only 70 percent of their asking price.

In our experience sellers willing to “share the risk” with a serious, qualified and creditworthy buyer have a better chance of receiving full price, or even a premium price, on the transaction. In many cases, businesses that are listed for all cash just don't sell. With reasonable terms, however, the chances of selling increase dramatically and the time period from listing to sale greatly decreases. Most sellers are unaware of how powerful a tool financing can be to a successful sale.

The offer of seller financing tells the buyer that the seller has enough confidence that the business can indeed pay for itself.
 
Q7. Why should I engage Tower Hill Advisors to sell my business?
A7. Tower Hill Advisors is a member in good standing of the International Business Brokers Association, and the M&A Source, an international network of business intermediaries specializing in the sale of middle-market companies; and of the Association for Corporate Growth, an international group of large enterprises actively engaged in mergers and acquisitions. Michael Zoglio, president of Tower Hill Advisors, is also a Certified Business Intermediary.

Tower Hill Advisors maintains constant communications with industrial business buyers and with established investment groups who provide regular updates regarding their acquisition criteria.

Selling a business is one of the most crucial financial transactions of your life. As a business owner, you probably have or will have a good portion of your assets tied up in your business. When the time comes to sell you need the best representation possible. In what can be a confusing and sometimes difficult process, it pays to leave as little to chance as you can. With the help of a proven professional intermediary, you can navigate unknown territory with more ease and less risk.