Frequently Asked Questions
What services does your company offer?
Entrust supports business owners who are considering selling their businesses. Everything we do is confidential. Based on your goals and needs, we will help you evaluate your options, provide our opinion of the value of your company on the open market, and list your business for sale, guiding you through the entire sales process.
Why should I hire your firm?
We are not the right choice in every single case, and we won’t know whether you should hire us until we’ve learned more about your business. For example, we will sometimes suggest other alternatives to hiring us that are a either lower cost to you or that may have other advantages to you.
Should there be a right “fit” between our company and your business, we are confident that we can help you. Entrust brokers are professionals who have enjoyed success in other fields and, in addition, who have owned and managed their own businesses. We have legal, financial and operational experience, and have been involved in hundreds of millions of dollars of transactions, from sales of small businesses to sales of large public companies. As a result, we bring the types of background and judgment that increase the odds of a successful sale. We believe strongly that businesses must be represented honestly and ethically, and that win/win negotiations lead to the most successful business sales.
What are your fees?
In almost all cases, our fees are based on a percentage of the sales proceeds. We believe this best aligns our interest with yours.
Another brokerage charges fees that are higher/lower than yours. Why is that?
We are always happy to discuss with you whether the value we bring to your sales efforts is commensurate with our fees. Just as you evaluate the differences in fees charged by other professionals, such as accountants, lawyers and doctors, only you can determine how much emphasis to place on fee differences between business brokers.
While we understand that fee levels are an important consideration in choosing someone to represent your business for sale, we also believe that there are other important considerations. A botched sale, a messed-up relationship, or an avoidable lawsuit can have far larger consequences for you than a difference in brokerage fees. We would never suggest to you that you should hire us because we are “cheaper” than someone else.
At the same time, if you believe that another firm will provide the level of expertise and experience you need at a lower price, we would not discourage you from hiring that other firm.
Do you specialize in any particular industry? / Do you have experience in selling my type of business?
We have experience in representing businesses in a wide variety of industries, as well as in selling to a wide variety of businesses and personal buyers. In most cases, we are able to move easily between different types of businesses. In rare cases, where we believe that you would benefit by specific industry specialization, we will tell you so and refer you to a specialist.
Who will be handling my business?
You will have a specific broker to assist you. However, the expertise of the firm is always available to assist in the successful sale of your business. Our Director of Operations will also be involved on a day-to-day basis. She works with buyers to obtain all appropriate buyer paperwork, and she coordinates with the listing agent to funnel information to those buyers as appropriate.
When is the best time to sell my business?
The answer to this question depends on many personal and business considerations. Once we understand your goals, your reasons for selling, and the state of your business, we will explore with you our thoughts on your timing options. Ultimately, of course, the decision is yours.
How do I decide if I should I sell my business?
Only you can decide. You need to weigh various considerations. We will explore with you the pros and cons of selling sooner or selling later. Combine that knowledge with your personal goals and any personal considerations, and you can then determine what options seem most attractive under the circumstances.
How do you determine an asking price for my business?
There are a many ways to value businesses. Ultimately, the value of any business is set by the marketplace. We approach each the pricing process with that fact foremost in our mind. We look at a variety of factors including the general economy, buyer demand, industry performance, business performance and trends.
As a Seller, you should never forget that the buyer is buying future performance, even though the only information available is historical. All pricing opinions we make must be reviewed by at least two Entrust brokers to provide a broader perspective and a higher confidence level.
What documents should I have available for you to review my business?
At the beginning, we generally ask for three years of tax returns, three years of annual P&L statements, three years of ending balance sheets, a year-to-date comparative P&L to the same period last year, and a current balance sheet. Depending on specific circumstances relating to your business, we may ask for different or additional documents.
Should I tell my employees that my business is for sale?
Though there are exceptions, in most cases, we strongly recommend that you NOT tell your employees that your business is for sale. Knowing that their place of employment is for sale creates unnecessary anxiety for employees. They feel they are in an unknown situation and begin to second-guess their positions or the stability of their jobs, or they experience anxiety about the new owners. All these feelings may be moot, as often a new owner comes in and tells the employees that their jobs are in fact secure. We can, however, discuss appropriate exceptions for you.
Should I tell my customers or vendors that my business is for sale?
Again, we generally strongly recommend against doing this. There may be exceptions where a customer or vendor may be a likely potential buyer, in which case we will discuss ways to approach the possibility of sale while minimizing the risk of disclosure.
How is the confidentiality of my business maintained?
When we market your business for sale, we do not disclose the name, the exact location or provide any other information that we believe would allow someone to identify that business as being yours. When we receive a request for further information about the listing, the first thing we do is ask the buyer to complete and return to us three documents (a confidentiality agreement, an agency disclosure document, and a buyer profile on which the buyer can indicate to us his/her financial ability to make the purchase). Only when all three documents are returned to us do we release our write-up, the confidential business review of your business, to that buyer.
We are always willing to discuss whether additional safeguards are appropriate. And, in certain cases we will discuss whether a lower threshold of confidentiality is appropriate. For example, we often find that self storage buyers are reluctant to provide more than a confidentiality agreement at the outset of their exploration.
What is the selling process?
Whether it’s at our office, your place of business, or some other location, we offer a no-obligation, no pressure meeting environment. We do not bring any documents for you to sign when we first meet with you. We begin by discussing your goals, learning about your business, and reviewing financial information. We will then provide you with our opinion of most probably selling price, our thoughts on the best sales process, and what alternatives you might want to consider.
Once again, our analysis and advice is complimentary. At that point, if it makes sense to you and to us, we can list and confidentially market your business.
What are the terms of your listing agreement?
In the vast majority of cases, our Agreements are exclusive agency agreements with compensation based on success. We do this to try to align our interests with yours to the extent possible.
What happens if my business does not sell by the end of the listing agreement?
After the listing agreement expires, you can choose to terminate, renew or continue to list with us on a month-to-month basis.
How long does it take for a business to sell?
We have received offers on several businesses within a week or two after listing. Other businesses take significantly longer to sell and some businesses, particularly those that suffer adverse operating results, may not sell. We can provide a better opinion on this question after we’ve learned about your business and sit down with you to discuss marketing.
How do you find buyers? / How will you market my business?
We will post your business for sale on numerous websites that we have found to create worthwhile buyer interest. We will also post it on our website. In addition, we will send an email to all buyers in our database informing them of our new listing. Should there be a particular buyer that we know of who is looking for a business such as yours, we will reach out to him/her directly. Each business, however, does have its own characteristics, and we will adjust how we market that business.
There isn’t just one way to approach it. For example, in one recent situation we placed more than 2,000 phone calls and sent out more than 1,000 letters to potential buyers.
What if during the time my business is listed with you I find a buyer myself?
Our listing agreement gives us the exclusive right to sell your business. Before entering into a listing agreement with us, we will often explore with you the idea of contacting potential buyers on your own. However, should you find your own buyer during the listing agreement time frame, we would continue to assist you to make the deal work, and in accordance with the terms of the Listing Agreement, we would receive our normal fees.
What is seller financing? Should I offer it?
In this market, seller financing is helpful because it gives buyers a sense of confidence as they see your belief in the continued success of the business. It can also significantly speed up the transaction, as there may be no waiting for any other third party for loan approvals. Studies have also suggested that owner financing can result in higher sales prices.
What is due diligence?
Generally, due diligence is a short period of time after entering a purchase agreement where a buyer investigates and confirms the facts presented to him/her about the business and the sale. This background check allows buyers the opportunity to make sure they have what they need to know in order to proceed with the transaction. The buyer may ask for additional financial information or details about the operations of the business.
How does SBA financing work?
The SBA provides certain guarantees to banks to in encourage them to make loans in the small business arena. Along with those loans, the SBA provides certain guidelines that banks must generally follow in the underwriting process in order to obtain the loan guarantee. In general, banks will look to profitability of the business, creditworthiness of the buyer, and the amount of experience the buyer has had in managing similar businesses.
The SBA process can be lengthy and as of 2011 is a difficult process because, as in other areas, underwriting standards are strict.