business brokerWho would believe that a business broker would provide advice when it comes to selling a website, internet, or technology business.  iMerge Advisors has determined when a website or internet business owner or a small business owner decides that he/she is going to sell without hiring a broker that is usually the final say in the matter. This article is directed to that crowd to sell a business without a broker without stumbling over common mistakes.

First order of business is making sure you have all the necessary items ready for when the inquiries start arriving otherwise buyers will lose interest if they are sitting around waiting for a package to be assembled. In addition, having this completed beforehand reduces the distraction you will encounter while running the day to day operation of your business.

Beyond the assembled data make sure to take the time to create a “presentation” of the business describing:

  • A business summary (Paragraph about the business)
  • Industry overview (Info at the macro level, stats, size etc)
  • Where the business is currently positioned
  • The business areas of leadership (What is it good at)
  • Vision/strategy (Future growth – The business plan)
  • Estimated proforma performance for future years
  • Employee positions, salaries and job descriptions
  • Why you are selling and what your ideal deal would look like


Advertising the business

Advertising the business for sale can be done using a handful of websites such as BizBuySell.com, BizQuest.com, GlobalBX.com, BusinessesforSale.com, BusinessBroker.net, and MergerNetwork.com.  When placing the ad give some thought as to whether you wish to do so in a generic stealth mode or to provide the name and URL of the business.  Also, keep the title and description short and clear.  Buyers do not like trying to guess what is the business for sale.

Getting Inquiries

As the inquiries arrive there will be many tire kickers.  You will need to have them complete an NDA (some of the sites above provide one) as well as show proof of funds indicating they can actually buy your business.  This is the #1 mistake sellers make.  Getting this info will save a giant headache down the road.  For those qualified buyers send out the prepared package you have completed and give them a few days to review.  If you haven’t heard from them in 24-48 hours send an email or call to see if they should be crossed off the list of potential buyers.  As other interested buyers “circle the tank” with additional questions  you should schedule a conference call as this is more efficient in making sure everything is covered.  Going back and forth with emails is time consuming.

Narrowing Funnel

Eventually as the funnel narrows a buyer or two (nice) will submit a formal offer and the negotiations begin.  Once the back and forth ends and the terms are agreed upon you have two choices, either sign a letter of intent agreement with the updated terms and conditions or move right to a purchase agreement (have the buyers attorney draft this).  Keep in mind both documents will contain conditions subject to the completion of due diligence.

Buyers wishes vary widely but the basic guideline is to be able to show the dollars coming into the business (merchant account statements, Paypal, Amazon, checks, etc)  then seeing that money (less fees) flow into bank account statements and from there out as expenses paid.  The balance should resemble the profits stated for the business.  If you have multiple bank accounts and have mixed personal expenses within those accounts, anticipate a more laborious process.

Do not attempt to mislead or hide anything.  It will likely bust the deal.  If you feel the buyer is “nitpicking”, say so and explain why you feel getting that detailed is not necessary.  If discrepancies came up  during due diligence there maybe some re-negotiations and concessions you make.

Taxation and Closing

In parallel to this process, there should be a discussion with the buyer on how the deal is going to be recognized for tax purposes.  Make sure you are working closely with your accountant to understand the ramifications of this allocation. Once completed, the buyers attorney can update the documents and get them over to your attorney to review.  Make sure you control the attorney and not vice versa or you will see that hourly meter blur in front of your eyes.  Tell him/her you have agreed to the terms as they are and he/she should just make sure the documents will not come back to bite you down the road.  If there is inventory involved make sure your attorney knows this either to complete a UCC filing search or have the parties waive this.

The closing should be anti-climatic at this point with the signing of documents, receiving checks or wire payments and completing the transfer of assets.   Congratulations would be in order here!  Stay tuned for an article on best practices for post-closing transitions.