Who is YourBizNumber evaluation service designed for?
Our service is designed for Small Businesses owners, those with sales from $100,000 to as high as $3,000,000. These “Mainstreet” or “Mom and Pop” businesses, the backbone of the U.S. economy, will generally sell anywhere from under $100,000 to $2,000,000. They want to know what their business could be worth but don’t want to break the bank finding out.
What if my sales are over $3,000,000 and I want to a BizNumber evaluation?
These services are available under a different program. The provider for this service may be different than the office who routinely works with YourBizNumber. Be assured that they are professionals and the same no-strings-attached business model applies.
Is there a charge for a BizNumber evaluation?
Yes there is. For most businesses, the cost of the service is $1,000. Half is due when the agreement is signed with our partnering office; the other half is due upon delivery of the results of your BizNumber evaluation.
What if I think the result of my BizNumber evaluation is too low?
This happens. For some business owners it is wise to utilize the services of YourBizNumber several years before they are ready to sell. Preparation and actions taken now can help you reach your maximum selling price when the time comes. Knowing how an industry professional views your business can provide a new perspective on action plans, policies and strategies that need to be implemented.
I own the building and property. Does my BizNumber evaluation include the real estate?
No. Since the vast majority of small business transfers do not include the sale of real estate, we keep the value of real property independent of the business. We perform the BizNumber evaluation of your business. We advise the use a qualified real estate professional when determining the value of real property.
What about confidentiality?
A confidentiality agreement will be executed prior to the receipt of any of your business documents. Unless specified in writing, all materials provided will be returned to the client when the final report is delivered.
Why can there be such a variation in potential selling prices between valuation firms?
Business valuations and pricing can be as much art as science and can be influenced by different experiences and interpretations of facts. It can also be influenced by the evaluating expert. Ultimately, a buyer determines the true value of a business. A business can be worth differing amounts to different buyers depending upon their requirements and operating intentions.
Are there any things I should be specifically on guard for when comparing opinions from multiple firms?
Be wary of any firm or individual who tells you that your small business is worth more than your overall annual revenue. While there are some exceptions, they are not the norm. Be very cautious of those who tell you that a probable selling price for your business is 2,3,4,5,6 or 7 times the total revenues of your business.
How can I tell if tell if the selling price I’ve been given is too high?
Put yourself in a buyer’s shoes. Could you afford to service the debt, make a living wage and realize a return on your investment based upon what you are being told? If you cannot answer yes to all three questions, proceed with caution.
Am I going to be pressured to list my business for sale once I complete my BizNumber evaluation?
No. This service originated to offer an alternative to companies who provide unrealistically high valuations, sometimes charging substantial sums, and sign you to restrictive, long-term listing and/or marketing agreements. They build false hopes of a big payday that may never come. Our partner offices are business brokerages and will be happy to assist but our services are not conditional.
What if I decide to sell my business?
If you decide to sell your business utilizing the services of one of our partner offices, 100% of the monies paid for utilizing the BizNumber evaluation service will be applied against the commission earned when your business sells. For most local businesses there is no additional charge to list your business for sale. For out-of-town businesses, additional travel charges may apply.
What about the business for sale listing agreement?
The business for sale listing agreement dictates the terms of your relationship with the person, office or firm who will be selling your business. This is a legally binding document! Most of us cannot read legalese. You should have it reviewed by competent counsel before signing!
Here are some other things we think you should be looking for in this agreement.
- The name, address, telephone number, and website of the firm you will be working with.
- A realistic term of expiration. A one year term without an automatic renewal should be sufficient. The average business is on the market many months and in some cases it can take years. If you are satisfied with the services of your broker, you can always renew. If you are not satisfied with their efforts, why do you want to continue the relationship?
- The price at which your business will be marketed should be clearly shown in the agreement.
- The commission or fee structure that your broker will be working under should be clearly defined.
When should I sign the agreement listing my business for sale?
The listing agreement should be signed after you have received the broker’s opinion of a selling price or your BizNumber for your business and had time seek the counsel of a trusted advisor. The business for sale listing or a marketing agreement should never be signed at the same meeting where it is initially presented. We advise that you have this document reviewed by a trusted advisor. You are considering the sale of what could be your most valuable asset.
How should I check out a business broker before listing my business for sale with them?
You need to know something about the person who is going to sell your business.
- Ask your accountant, attorney, banker or other trusted advisor what they know about the firm or individual you are talking with.
- Ask the broker to detail their credentials and those of his/her team.
- Ask for sold business references, local if at all possible. If they refuse for confidentiality purposes, ask to speak with the accountants and attorneys they’ve worked with in your market.
- Check their website and affiliations. We suggest that you only work with offices and individuals who are members of the International Business Brokers Association and have agreed to adhere to their code of ethics and standards. Email us to receive a copy of the IBBA Code of Ethics.. If at all possible, we suggest you work with an active Certified Business Intermediary or a firm under the guidance of one. These individuals have had additional training and ongoing continuing education to keep them at the forefront of their industry.
- Google them. If the results are questionable, ask them to explain.
- Consult the Better Business Bureau.
- Ask to see the websites they will post your business on when it is going to be listed for sale. The internet is a very popular way to advertise for buyers. To see what could be the best Business for Sale websites in your market, Google the term “Business for Sale and the name of your town,” research the sites that are shown. If you cannot find references to the firm and their listings, proceed with caution.
I don’t have an accountant or Attorney. What should I do?
Ask your friends or other trusted advisors for their input. They may already have the relationship in place. Also, a good business broker will establish themselves with the legal and accounting professionals in the community or market segment. They should be able to provide you with a list of potential candidates. Your state should also have an organization of accounting and legal professionals. Consult with them for a list of those with business transfer expertise in your market. In any case, you should interview these individuals and work with the one you determine will best represent your needs.
Do I need an attorney? The broker said he can draft the document or has an attorney that will do it.
Few business brokers are licensed to practice law. There are legal professionals that will act as scriveners and produce all of the documents to ensure a complete, legal transfer of ownership. This works well for small transfers where cost is the overriding issue but the buyer and seller need to understand that neither will be receiving legal representation. Should issues arise post-transfer the attorney will not be able to represent them. These documents should still be reviewed by your attorney prior to signing.
Can you guarantee that my business will be sold or that you have a buyer?
The “I have a buyer for your business” ploy is a common tactic for some business brokerages, M&A firms and less than scrupulous individuals. It can be just that, a ploy. The intent is to get you to sign a listing agreement and then determine if there is a buyer for your business. Any established business brokerage has a network of individuals wanting to buy a business. Until your business is properly vetted, no one can know it they have THE buyer for your business.
Any parting thoughts?
Don’t let yourself be taken in by a fancy presentation, nice dinner and promise. If it sounds so good to be true, it probably is.