Selling Your Business FOR ‰ DUMmIES by Barbara Findlay Schenck Foreword by John Davies CEO, Sunbelt Business Brokers 01 381892-ffirs.indd i 9/30/08 6:04:29 PM 01 381892-ffirs.indd i 9/30/08 6:04:30 PM Selling Your Business FOR ‰ DUMmIES by Barbara Findlay Schenck Foreword by John Davies CEO, Sunbelt Business Brokers 01 381892-ffirs.indd i 9/30/08 6:04:29 PM ® Selling Your Business For Dummies Published by Wiley Publishing, Inc. 111 River St. Hoboken, NJ 07030-5774 www.wiley.com Copyright © 2009 by Wiley Publishing, Inc., Indianapolis, Indiana Published by Wiley Publishing, Inc., Indianapolis, Indiana Published simultaneously in Canada No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, scanning, or otherwise, except as permitted under Sections 107 or 108 of the 1976 United States Copyright Act, without either the prior written permission of the Publisher, or authorization through payment of the appropriate per-copy fee to the Copyright Clearance Center, 222 Rosewood Drive, Danvers, MA 01923, 978-750-8400, fax 978-646-8600. 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Library of Congress Control Number: 2008937851 ISBN: 978-0-470-38189-2 Manufactured in the United States of America 10 9 8 7 6 5 4 3 2 1 01 381892-ffirs.indd i 9/30/08 6:04:30 PM About the Author Barbara Findlay Schenck has spent more than 20 years helping businesses — especially small businesses — start, grow, market, and brand their companies. Her career started in Honolulu, where she was director of admissions for a private college before joining the staff of Hawaii’s largest public rela- tions f rm. She and her husband, Peter, left Hawaii for an assignment with the Peace Corps in Malaysia before returning home to Oregon, where they started an advertising agency that ranked as one of the Northwest’s top 15 when they sold it in 1995. Since then, Barbara has written a number of business books, including Small Business Marketing For Dummies, now in its second edition; the second edition of Business Plans Kit For Dummies; and Branding For Dummies, which she coauthored in 2006 with help from branding expert Bill Chiaravalle. Now, with Selling Your Business For Dummies, she guides entrepreneurs and retirement-ready small-business owners as they pursue the ultimate goal of a business sale. The book includes expert advice from John Davies, CEO of Sunbelt, the world’s leading business brokerage f rm, who wrote the fore- word and shared his invaluable tips, advice, and real-world experience. For more information on John Davies, visit his business Web site at www.sunbeltnetwork.com. For more information on Barbara’s background, books, and business advice, visit her Web site at www.bizstrong.com. 01 381892-ffirs.indd i 9/30/08 6:04:30 PM 01 381892-ffirs.indd iv 9/30/08 6:04:30 PM Author’s Acknowledgments I give thanks for making this book possible to: Peter Schenck, who helped me realize that three quarters of a million busi- ness owners would be wanting advice on how to sell their businesses over the upcoming few years, and who heaped his wisdom, work, and a wealth of knowledge into this book’s outline, research, development, and writing. The term coauthor isn’t suff cient to describe his role — co-creator might come close. Dirk Zeller, CEO of Real Estate Champions and author of Success as a Real Estate Agent, who didn’t hesitate for a moment to name John Davies when I asked for his advice on who was the best resource for expertise on business sales. John Davies, CEO of Sunbelt Business Brokers, who returned my out-of-the blue call and who responded to my request for business sale expertise with a depth of advice and insight that humbles me to this day, for which I and read- ers of this book will be forever grateful. The team at Wiley Publishing, which never fails to impress me. First, to Acquisitions Editor Michael Lewis, who steered this book into existence and guided its format and development. To Project Editor Kristin DeMint, who worked her magic on everything from book structure to book content, backed by Copy Editor Todd Lothery. And to Howard Locker, who accepted Kristin DeMint’s invitation to serve as the book’s technical reviewer and who improved this book in dozens of ways. Matthew Schenck, whose technical support and business perspective kept me current and whose humor kept me going. Brian Bowler, who bought the ad agency that Peter and I founded, who made selling a business a pleasure and a success story that prompted the count- less how-did-you-do-it questions that ultimately led to this book. Finally and mostly, to everyone with a dream to sell a business and start a new life chapter. Thank you for trusting this book to guide you through the sale process. May fortune follow. 01 381892-ffirs.indd v 9/30/08 6:04:30 PM Publisher’s Acknowledgments We’re proud of this book; please send us your comments through our Dummies online registration form located at www.dummies.com/register/. Some of the people who helped bring this book to market include the following: Acquisitions, Editorial, and Media Composition Services Development Project Coordinator: Katherine Key Project Editor: Kristin DeMint Layout and Graphics: Joni Burns, Acquisitions Editor: Michael Lewis Reuben W. Davis, Christin Swinford, Christine Williams Copy Editor: Todd Lothery Proofreaders: Melissa Bronnenberg, Assistant Editor: Erin Calligan Mooney Sossity R. Smith Technical Editor: Howard Locker Indexer: Potomac Indexing, LLC Editorial Manager: Michelle Hacker Editorial Assistants: Joe Niesen, Jennette ElNaggar Cartoons: Rich Tennant (www.the5thwave.com) Publishing and Editorial for Consumer Dummies Diane Graves Steele, Vice President and Publisher, Consumer Dummies Joyce Pepple, Acquisitions Director, Consumer Dummies Kristin Ferguson-Wagstaffe, Product Development Director, Consumer Dummies Ensley Eikenburg, Associate Publisher, Travel Kelly Regan, Editorial Director, Travel Publishing for Technology Dummies Andy Cummings, Vice President and Publisher, Dummies Technology/General User Composition Services Gerry Fahey, Vice President of Production Services Debbie Stailey, Director of Composition Services 01 381892-ffirs.indd vi 9/30/08 6:04:30 PM Contents at a Glance Foreword .................................................................. xvii Introduction ................................................................ 1 Part I: Getting Ready to Get Out ................................... 7 Chapter 1: So You Want Out of Your Business? Your Options and the Process ....... 9 Chapter 2: Evaluating Your Business as a Sale Prospect ........................................... 29 Chapter 3: Sprucing Up Your Business ......................................................................... 49 Chapter 4: Assembling Your Business Sale Team ....................................................... 77 Part II: Packaging Your Business for a Sale ................. 93 Chapter 5: Compiling Your Financial Records ............................................................. 95 Chapter 6: Pricing Your Business ................................................................................ 119 Chapter 7: Telling Your Business Story — Succinctly! ............................................. 137 Chapter 8: Preparing Your Selling Memorandum ...................................................... 155 Part III: Launching and Navigating the Sale Process ... 181 Chapter 9: Planning and Launching Your Advertising Strategy .............................. 183 Chapter 10: Screening and Communicating with Ad Respondents ......................... 197 Chapter 11: Steering the Pre-Purchase Process and Accepting a Buyer Offer ...... 213 Part IV: So You’ve Got a Buyer! Now What? .............. 231 Chapter 12: The Investigation Begins: Due Diligence ................................................ 233 Chapter 13: Structuring and Negotiating the Deal ..................................................... 249 Chapter 14: Handling the Fine Print: Financing and Tax Specif cs .......................... 271 Chapter 15: Closing the Sale ......................................................................................... 283 Chapter 16: Announcing the Sale and Passing the Baton ......................................... 299 Part V: The Part of Tens ........................................... 309 Chapter 17: Ten Deal-Killers to Avoid ......................................................................... 311 Chapter 18: Ten Business Marketplace Trends and Truths..................................... 319 Chapter 19: Ten Things to Consider When Hiring a Broker ..................................... 325 Chapter 20: Ten Answers to Have Ready for Buyers ................................................ 333 Appendix: About the CD ............................................................................................... 341 Index ...................................................................... 349 02 381892-ftoc.indd vi 9/30/08 6:05:00 PM 02 381892-ftoc.indd vi 9/30/08 6:05:00 PM