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FAQ

Do you have questions about buying or selling a business in Charlotte or the Southeastern United States? We have answers! Browse our FAQs about selling or buying a business to prepare yourself for the business transaction process.

How long does it take to buy a business?

It depends on a lot of factors but we recommend starting 6-18 months in advance, if possible. There are so many factors involved in buying a business that the patience is required.

Do I need an attorney and an accountant to buy a business?

Buying or selling a business can be a complicated venture. While some businesses are sold without the help of accountants and attorneys we strongly recommend that both the buyer and seller engage professionals.

How much will the process of buying a business cost me?

We are typically paid by the seller not the buyer. Legal and accounting expenses may be incurred during due diligence period should you employ professionals to assist you, which we strongly encourage. Closing costs will be incurred at closing.

If I know of a business for sale, can you help me through the process?

Absolutely. VR is happy to work with you in this type of scenario.

Will the current owners train me to run the business?

Depending on the complexities of the business, the former owner will offer varying levels of training. On most small businesses the owner will offer training for two to four weeks at no cost to the new owner. This topic is usually part of the negotiations.

How do I know that the profit figures that the sellers claim are true?

As part of the acquisition process, you will have to go through “due diligence.” During this period the seller is required to present documents to verify the company’s profit numbers as well as any other information you request. Again, VR recommends working with an accountant to assist in this process if necessary.

Will I have to come up with the entire purchase price?

Usually not. Although 100% of the purchase price is sometimes required, sellers will frequently provide owner financing as part of the structure of the transaction. Additionally, a bank may be able to loan up to 80-90% of the purchase price through a loan sponsored the Small Business Administration (SBA). The business must meet certain criteria to qualify for SBA financing and the buyer must meet certain standards as well.

How much money will it take to buy a small business?

Businesses vary a great deal in price. The higher the amount of down payment, the more likely you will be in finding a business that meets your needs.

How do I sell my business without anyone finding out?

The first contact VR makes with the market of buyers for your business is via a blind (anonymous) profile of your company. Your location is described in general terms and so are the details of your company. Key financials are presented as well as a description of your products and services, along with its opportunities for growth. Your company is not identified in the profile. By hiring VR, who is responsible for preparing the documentation and handling the marketing process, you can ensure that the process remains confidential. This also allows you the freedom to continue to focus on running your business throughout the sale process – a key aspect of maximizing your closing price. VR’s proven process over 4 decades maintains your confidentiality by only releasing information about your business to qualified buyers who work under our confidentiality agreement.

Can I engage your firm to sell my company without my having to pay for a valuation?

Yes. For most small businesses VR does not charge upfront fees. We will do a free broker opinion of value that will give you a value range that you could expect in the marketplace. We do this before we contract to list your business for sale to make sure your expectations are realistic.

How long would it take to sell my business?

National statistics indicate the average time on the market for around 82% of businesses is 4 to 12 months. Fewer than 10% of businesses sell more quickly, and about 8% are on the market for more than 12 months. Price and the structure of the sale have the biggest impact on timing.

How long should a business brokerage firm hold an exclusive listing of my company?

One year minimum. National statistics indicate that on an average, businesses are sold within four to 12 months.

What are the most common reasons that deals don't close?

There are many reasons, but here are a few dominant ones.

  1. Overvaluation
  2. Sellers are not willing to finance a portion of the sale price (seller financing)
  3. Revenue declining
  4. Poor/Inaccurate financials that don’t withstand the due diligence process
  5. Sellers/Buyers get cold feet during the process
  6. Landlord issues – After a buyer and seller have “negotiated” a deal is that the landlord cannot come to terms with the seller and/or buyer
  7. Sellers, too often, listen to well-meaning outside relatives, friends or advisors who really don’t have sufficient knowledge of the selling process. Sellers who don’t use a professional business broker/intermediary are at a disadvantage. These outside professionals know the marketplace and greatly assist in finding the right buyer. They are a “value-added” service and will more than justify their fee. The seller who represents himself or herself will almost never get the price that a business broker professional will obtain.
When I sell my company do I also sell the property it occupies, or would I lease the land and/or buildings to the buyer?

Either option is possible. You may receive offers for just the business with rental income to you, as well as offers to purchase the business along with the real estate. You can choose whichever option you prefer. Depending on the type of buyer your business would most likely bring, you may want to consider the purchase of the property as an option for the buyer in order to widen the pool of prospects. VR employs business brokers that are licensed real estate brokers and can facilitate the sale of real estate as well.

What is the typical post-sale transition arrangement?

Based on the size and type of business, the current owner typically stays on for a period of two to eight weeks to train and insure a smooth transition. Larger acquisitions require a longer period of time. It depends on how the deal is structured.

Where will the closing take place?

Usually an attorney’s office involved in the transaction, but each deal is different.

When do I tell my employees that I am considering selling?

You should not prematurely tell your employees. There will be a right time, but if you are in the beginning stages of considering selling your business, the actual sale could be a year away. Your key employees could begin looking for work, most likely at your competitors. The value of your business could be affected by losing key employees. In addition, key customers could find out the status and begin looking for a new vendor if they are uncertain about the future.

What company materials do you need for the valuation analysis?

Financial data we review includes the past three to five years of:

  • income statements
  • balance sheets
  • tax returns
  • equipment list and appraisals
  • property/building appraisals
What type and size companies does VR represent?

We work with companies with revenues from $250k – $20 million.

Can I engage VR and still sell the company myself?

VR provides all the services required to sell a business, from initial valuation through closing. If you sell the company while under contract with us, you are still obligated to pay the commission in the engagement contract. The service we provide includes sourcing buyers and negotiating the deal, so if you have a buyer in mind, it is extremely important to refer them to us. We will provide professional representation with all buyers so you can concentrate on running your business.

What if I have a buyer?

That is great news. We are happy to work with sellers who have identified a specific buyer for their business. We will work aggressively on you behalf to make sure the transaction gets completed. Feel free to contact us to discuss this unique situation in greater detail.

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