Before discussing whether it is appropriate for you to sell your company yourself, two questions must be answered.

1. 1. Is the business in sale-able condition?
   
2. 2. Will the value and deal structure provide sufficient funds to you, the owner?

Sufficient funds means having enough money to pay off all bank debt, other liabilities, and taxes, and still provide you with a profit. If the answers to these questions are unknown, a Business Evaluation can be performed to determine the answers. A Business Evaluation is different from an appraisal. While business appraisals will provide a value, they do not test for sale-ability, optimum deal structure and the optimum financing available in the market. At the most, an appraisal will make some assumptions about financing. Be aware that unless the specific financing source is identified and verified, you could be in for a rough experience.

BizMACH’s Business Evaluation and Salability Tool (BEST®) is designed to provide the answers to these two critical questions. Like a business appraisal, an investment is required to get accurate answers to these critical questions. A typical BEST® report ranges from $2,500 to $3,500. Business appraisals require a similar investment.

A key component in a Business Evaluation is that it provides all the information needed to effectively advertise your business for sale and attract qualified buyers. The report must determine an acceptable price range and the support for that price. The BEST® report does this plus lets prospective buyers of all types know the business is pre-qualified for financing, the amount the lender will lend and the down payment needed from the buyer. Basically all of the detail needed to pre-screen interested and qualified buyers.

Unfortunately, this is where the road gets rough. Many owners deciding to sell their businesses on their own are not prepared for the buyers. The chaos begins when buyer calls or e-mails begin flooding in daily, interrupting work and personal affairs. Appointments are scheduled. Then you must determine if each prospect is credit-worthy and whether they can verify the cash down payment needed. You must also be prepared to negotiate and renegotiate over and over again. This part of the sales process is where the business broker or intermediary can add value – but at a cost of 10% to 12% of the final purchase price.

There are businesses that offer pre-qualification services, including BizMACH. The fees associated with these services – typically around $3,500 – are small when compared to broker commissions. This fee includes advice on deal structuring and facilitating the financing for the buyer.

Therefore, the investment required to sell your business yourself and achieve maximum value will be approximately $6,000 to $7,500 plus a small success fee, which is usually around 3%. From here the math is simple.

If you have a business worth $500,000, a broker commission will cost you $50,000 to $60,000 plus $2,500 up front to prepare the Offering Memorandum.

To sell it yourself, using the method described above, will cost $15,000 (3% x Sales Price) + $7,000 = $22,000. Selling it yourself provides an approximate savings of $30,000 to $40,000.