Selling A Small Business: A Guide For Minnesota Business

Owners By Jeff Slaton

This guide is written by Jeff Slaton Minnesota Business

Broker, to assist owners of small to medium size businesses

in the process of selling their businesses. At NetWorth

Business Brokers (NWBB), we are members of the world's

largest network of business brokers and M&A professionals.

As one of our valued sell-side clients, we want to welcome

you into our network. While we work together as partners in

the selling process, it is important that you be as well

prepared as possible for dealing, and ultimately,

negotiating with potential buyers.

This helpful guide will resolve many questions and offer a

number of practical forms, documents and valuable tips.

Together as we profess forward, keep these critical points

in hand:

• Selling a business is a process, not an event.

• The process is described in this guide.

• You have worked diligently at building your business;

likewise you should work as hard at selling it.

• To obtain the fair market value of the business, be

careful to maintain confidentiality and the profitability of

the business.

• Be carefully prepared with correct documentation.

• Understand buyers motivation concerns or issues in order

that rational conclusion

rather than emotion will lead to an equally advantageous

deal.

The time necessary to sell a business, from decision point

until the conclusion of the transaction, may be months - in

various cases, years.

The following contains a summary of the entire process:

1. The first step in deciding to sell your business is be

fully committed to the process in order to successfully

conclude the sale.

2. The second step is in the careful preparation of all

selling documents, which may include a business appraisal

and other offering documents.

3. Then we begin to search for qualified buyers by means of

a confidential advertising and marketing program.

4. Next, when NWBB notifies you of a qualified buyer, we

will have already made initial contact and screening of the

prospective buyer (see page 10). (Price and terms are not be

discussed here.)

5. NWBB begins negotiations with deal structuring. (A

discussion of pricing and terms here.)

6. Finally, after all issues have been resolved and an

agreement has been reached on price and terms, the

prospective buyer will submit a Letter of Intent / Purchase

Offer and an earnest money check. (NOTE: In many cases, NWBB

can be of assistance in getting the buyer financing for the

purchase, if necessary.)

7. The buyer will finalize his or her due diligence before

the closing transaction and you complete yours.

8. When everyone is in agreement that a sale is desirable,

probably with the assistance of your attorney and CPA, we

can now prepare a Definitive Purchase Agreement and all

closing aspects of the sale.

Successfully completing the sale of your business opens the

door to a new phase in your life. Whether you are selling to

enter retirement, pursue other business opportunities, or

just gain some time for yourself, proper execution of the

selling process is important. NWBB closely supervises every

step of the transaction to get the deal done and over the

finish line.

Completing the sale of your business is firstly one of the

more important or largest financial transactions you may

complete with in your life time. It is regularly the least

understood - and prepared for - in the life cycle of a

business. The sale of your business is the final chapter in

3 general stages of business:

1. Business start up (purchasing an established business or

starting your own);

2. Maintaining your business (operations, care,

building, improvement, relationships, and profitability)

3. Exiting (choosing an exit strategy from the business --

for many of potential reasons -- to a new owner who will

begin the 3 stages all over again).

It is the life cycle of business: birth, growth and

maintenance, and finally exiting that business entity.

There are many issues to contemplate when selling a

business and many challenges to successfully navigate to

that end. The buyer may want to know about things that may

not be important to you or appear to be nosey or the buyer

may ask for proof or make statements that challenge your

truthfulness. Bear in mind; trust must first be established

between the parties. There is an old saying "buyer beware".

Naturally, buyers will want to proceed with caution - and

will also consider other businesses opportunities- prior to

making an offer! The expressed purpose of our NWBB sellers

guide is to offer you an overview of what to expect, what to

prepare for, and how to handle the many issues and concerns

that will come up in the process of your selling the

business. By being educated, it is much more likely the

business will successfully close - at a good price, sooner

verses later, and with a lot less stress.

This manuscript is to benefit an increased knowledge of the

business selling process and the variables associated with

that process. It is not a recommendation to sell your

business. This document is a tool to help you in the selling

decision process. The final decision to sell, and a

determination of the selling price, rests solely with the

owner(s) of the business and professional advisors.

Jeff Slaton Minnesota Business Broker herby advises you to

select your own asking price for your business. Depending on

the circumstances and the ability to attract the correct

candidate buyer to your business, the actual price the

business finally brings may vary from the asking price you

initially set. Factors to consider in arriving at your

asking price would generally include:

• Business cash flow

• Return On the Investment

• The local and national economy

• Management style & influence

• Age and life cycle in an industry

• Market value of all assets (including liquidation value)

• Market Interest rates

• Competition

• Location Location Location

• Employee base

• Personal needs and circumstances

The Deal Structure examples presented as Appendix B (visit

our website) are for illustration purposes only. The legal

and tax implications in the examples have not been

considered. The precise terms and structure for the sale of

your business should be determined thorough discussions with

people you trust, who are looking out for your interests,

typically your advisors, attorney and accountant. The sample

documents presented in the appendix section are meant for

illustration purposes only.

You must carefully examine any documents involved in the

sale of your business and may choose to have your

professional advisors and or attorney review the actual

documents for the sale of your business.

Any and all financial figures contained in herein are for

illustration purposes only and do not represent any factual

or audited numbers. Accordingly, there have been no

representations, expressed or implied, as to the veracity

accuracy or relevance of any financial or other information

contained herein.

Please visit our website located in the RESOURCE BOX to obtain the complete Apendixes and Selling Forms included in the Sellers Guide.