5) Due Diligence and Closing: Once an offer has been accepted the parties enter into the due diligence phase. If the business is properly prepared for sale and the buyer is well vetted the chances are very good that the due diligence phase will go off without a hitch. But a good broker will remain vigilant nevertheless; deals can and do fall apart during this phase. Closing takes place at an attorney's office with the Seller receiving his funds and the Broker receiving his commission.
The 'ability to smell fear' is a quality I've never seen on a resume before.
2) List Business for Sale: The Listing Agreement defines what the Broker will do and what the Seller will do and how much the Broker will be paid. If it's a small shop this document can be very simple...usually one page. If it's a larger, more complicated auto repair business then it could be two or three pages. What it all boils down to though is this: My commission is 10%. I get paid at closing. I do not take retainers. I don't need to.
4) Offer to Purchase: Sometimes an offer is presented as an official Offer to Purchase and sometimes the offer comes in the form of a Letter of Intent. Either can be beneficial to the deal depending on the situation. Here at the Salt Mine, I know when to go Offer and when to go LOI.
1) Determine Asking Price and Deal Structure: This is without question the most critical part of the selling process. No matter how good a salesman the broker is, the operating history and profitability of the business will have the greater influence by far on any offer that is forthcoming. The best rule of thumb is to establish an asking price that is as high as possible but still attractive to a buyer. The structure of the deal is also extremely important.
More detail on the process...
3) The Marketing of the Business: Tried and true methods work best. Advertise the opportunity on well established websites dedicated to the marketing of businesses that are for sale. Then support that effort by making the opportunity known to the many qualified buyers that have already made contact with my firm. This second way of putting buyers and sellers together is very important. Half the shops I sell are to buyers that are already in my database.
Buyers are entrepreneurs by nature, and as such they expect to be able to leverage their money. The viewpoint of a buyer will almost always be, "Why would I buy a business for all cash at $500k when I can use that same $500k as a down payment and buy a $1.5 million business?" The bottom line is that an insistence on all cash - even with a fair asking price - reduces the probability of a close by 80%.