FAQ

Question- How does ENLIGN handle confidentiality?

Answer- Confidentiality is the number one concern aside from selling price of most business owners when selling their business. They appreciate that the most basic confidential information, that the business is being listed for sale, can have a negative impact on their employee, vendor, client, and banking relationships. For this reason Enlign requires that potential buyers complete a non-disclosure agreement as well as a detailed buyer profile. In combination with the profile a qualified business broker will interview the prospect by phone or in person prior to providing any sensitive information.

Question- How do you market and advertise a business for sale?

Answer- ENLIGN believes that maximum exposure across marketing channels is the best way to promote a business for sale because it is impossible to predict where or when a qualified buyer will be looking. So we market across channels using online sources including the 12 largest business listing databases, our proprietary in-house buyers list, as well as our professional network of buyer’s agents, attorneys, CPAs, wealth managers and financial planners. Because ENLIGN is a firm rather than an individual broker, we have access to an expansive collective network. Placing an ad in the classifieds and waiting for the phone to ring is not marketing.

While ENLIGN maintains strict confidentiality during all marketing, some sellers request a lower profile marketing effort. As such, ENLIGN tailors all marketing to the desires of each individual seller.

Question- How long does it take to sell a business?

Answer- The typical time to closing for our clients is three or twelve months. The key factor is an appropriate asking price, which is determined after a business valuation is performed. Other factors include industry, growth potential, geographic location, revenue sources, stability of employees and clients, value of inventory and assets as well as inclusion of commercial property. The business climate in North Carolina is strong and growing, which makes our state intriguing to potential buyers.

Question- How is ENLIGN compensated?

Answer- ENLIGN charges a nominal retainer at the beginning of the engagement and a success fee upon the completion of your sale or purchase. The purpose of the retainer is to ensure that the seller is ensure that the seller (or buyer) is committed to consuming a transaction and to provide some compensation for the work to value and market the business as well as negotiating and structuring the closing. The amount of the retainer is nominal and varies with each transaction; however the vast majority of ENLIGN’s compensation comes in the form of a success fee. This insures that all parties are focused on the same goal - successfully completing a transaction.

Question- How long is your typical contract and what happens at the end of the term?

Answer- ENLIGN’s typical exclusive listing agreements are twelve months in length. This is to give your business a fair time to sell and ENLIGN a fair time to market and find a qualified buyer. Even with a retainer ENLIGN invests significant time and money in marketing your business. After the listed contract date is complete you can choose to renew the contract if you are satisfied that ENLIGN is working hard to market and sell your business. If you choose not to renew the contract, there is no additional cost. Note that sellers are responsible for paying fees or commissions on transactions where the buyer was introduced by ENLIGN even after the end of the initial term.

Question- How do you handle owner financing?

Answer- Owner financing is a choice made by the seller. In our experience, a seller willing to provide some financing can expect a higher total transaction value. If they agree to finance a percentage of the transaction with the buyer ENLIGN will assist in setting up financing. This varies from owner to owner. Some owners are willing to owner finance significant percentages while others are not willing to provide any. ENLIGN’s fee is calculated on the total transaction price and collected at closing regardless of financing arrangements.

Question- Is a business brokerage firm or individual better able to represent my business?

Answer- Typically, a firm with more resources and experience can offer the seller a more comprehensive selling plan and a wider network with which to attract buyers for the sale of your business. However, there are a number of very good sole practitioners.

Question- When is the best time to sell a business?

Answer- The short answer is that the best time is usually the hardest time because it’s when the business is doing well and the future looks bright. From a geographic and economic perspective now is a good time to sell businesses in North Carolina and specifically in the Triangle area. Our State has been recognized for great economic and business growth in the past decade. Demographics and population in North Carolina continue to grow, with that comes the new, young entrepreneurs that want to own businesses. Another reason now is a good time is the vast amount of private equity flooding the market. Lower interest rates also give your buyers enticing urges to buy now rather than later.

Question- Should I tell my employees my business is for sale?

Answer- Experience tells us you need to tell your employees either right before or right after the sale. Some buyers will request that they meet the employees during due diligence. This should be carefully considered.

Question- Can you sell a business that is on leased or rented property?

Answer- Absolutely. In fact it is more common that a business be in leased or rented space than in space owned by the business. It is important to insure that the lease is transferable to the new owner as part of due diligence. On occasion businesses will sell where the seller holds the property and leases it back to the new owner.

Question- What can I do to help a broker sell my business?

Answer- Regardless of which broker you use, tell the truth, be responsive to information requests and appreciate that it takes time to identify and close a qualified buyer. Continue to run the business as you would if you were not planning to sell.

Question- Why use a broker?

Answer- There are a multitude of reasons, but the bottom line is because a qualified broker like ENLIGN will sell the business in less time at a higher price while maintaining confidentiality and allowing you to continue operating the business during the entire process.

Question-What kinds of offers should I expect to receive?

Answer- Assuming that the business is appropriately priced you should expect to see offers between 85% and 100% of asking price. The exact percentage will be primarily affected by amount of seller financing, industry, time on market and multiple of seller discretionary cash flow. Offers should be in writing and be accompanied by an earnest money payment of at least $5000.00.

Question- How can I be protected when I provide owner financing?

Answer- At a minimum you should execute a promissory note with the buyer. If the amount warrants it, a UCC filing is justified. For more information about UCC filing in North Carolina, please see the North Carolina Secretary of State webpage covering UCC filings: http://www.secretary.state.nc.us/ucc/ThePage.aspx. Ultimately, you can sell the note at a discount on the secondary market and eliminate all collection risk exposure.

Question- How will I be taxed as a seller?

Answer- ENLIGN does not provide tax advice. However, your tax advisor will be able to explain the relevance of allocation in the definitive purchase agreement. It may be possible to defer or reduce taxes using structured sales or employment contracts.

Question- What if I find a buyer after signing the listing agreement?

Answer- Some business sellers feel that identifying a buyer is half of the brokers work. In fact, it’s much less. Typically, many potential buyers are interviewed by the broker prior to a successful transaction.

Question- What is the SBA?

Answer- The SBA is the Small Business Administration. The SBA is a Federal loan guarantee program. The SBA does not make loans. The SBA guarantees bank loans which makes banks more willing to approve loans to business buyers.

Question- How much money will I have to bring to closing when I am buying a business?

Answer- Every transaction is different and the range is $0 to 100% of the agreed upon selling price. A good minimum for planning purposes should be 10% of the transaction price. Some lenders may require more and you will also need to have liquid operating capital available to operate the business.

Question- How does seller financing work?

Answer- Seller financing is quite simply when the seller of the business finances all or part of the sales price. The loan is typically documented with a promissory note detailing the terms and conditions.

Question- What is the benefit to buying a franchise?

Answer- Franchisors claim to have a higher success rate than non-franchised businesses. Franchises have a experience specific to their industry that a new business owner can leverage. Franchisors often also offer support services to the local owner such as training, management training, and marketing.

Question- How long do sellers usually agree to train new buyers?

Answer- Dependant upon the industry 1-4 weeks is common. Sellers may continue with the company as a consultant or employee.

Question- Why not just start a business myself?

Answer- Surveys and statistics show approximately 80% of new businesses fail in the first three years. Buying a business with a proven track record reduces the risk of failure. Existing business have a customer base, cash flow, established vendors and employees, name recognition and location awareness.

Question- What is Goodwill?

Answer- Goodwill is the difference between the total value of a business and the “hard assets” of the company such as Furniture, Fixtures, Equipment (FF&E), inventory and real estate.

Question- What is the difference in a asset buyout and a stock buyout?

Answer- In an asset purchase or “asset strip” the buyer is acquiring the assets of the company, but not the stock. In a stock purchase the buyer is acquiring the stock itself and the underlying assets. There are tax and legal implications of this decision. As such, the majority of small and medium business transactions are asset sales.

Question- If I subscribe to your email list will I be inundated with spam email?

Answer- No. We will not sell, trade or exchange in anyway email addresses with others. This feature of our website is to give interested parties news about our company’s progress, new listings, future newsletters, tips and strategies.