Selling a Business Requires Solid Financial Information

Owning a small business doesn’t always mean coming up with a brand-new, never-before-seen concept. Sometimes, the opportunity comes along when another entrepreneur decides it’s time to change course or retire.

Buying an existing small business can be a great way to become your own boss without having to start from scratch. But that’s not to say there isn’t plenty of time and hard work involved.

On the other side of that equation, selling a business can help pay for retirement or fund other ventures. That also takes time, effort and solid planning.

“The main thing sellers need to have is accurate financial information that a discerning buyer would be able to evaluate as to the conditions of the business and the viability of the business over the long term,” said Terry Viala, a partner with Cantrell-Viala & Associates in Fayetteville.

The firm was founded in 1984, and handles mergers and acquisitions in addition to business brokerage and other services. In 2006, the firm handled 22 transactions.

Over the years, Cantrell-Viala has worked with businesses large and small, from outfits with three employees to those with 500, and annual revenue ranging from $100,000 to $20 million.

“We work with business owners and help them evaluate the current status of their business and whether it’s ready to sell from a financial standpoint and an information standpoint,” he said.

Viala’s firm prepares reports that show not only financials, but also market information, competition, employee data and the overall viability of the product or service.

“We take a lot of time on the front end so that when we take it to a qualified buyer, they can act quickly,” he said.

The time it takes to put together a report varies based on the type of business, but for a business with exceptional recordkeeping and financial history, Cantrell-Viala can put together a report in two to three days.

An owner that’s involved in the daily operations of a business is often an asset for a buyer, because they can work out a deal where the seller agrees to stay on and train the buyer.

It’s sometimes easier to sell a business that has an owner/operator as opposed to a silent owner for this reason.

Key employees are another concern when looking to buy a business. A buyer will want to ensure that the most knowledgeable staff members stay on during the transition.

Often, a deal can be structured to include an agreement about keeping key employees on and perhaps providing them with some extra compensation or incentives.

A potential seller should be realistic with expectation of what the business will bring in a reasonable amount of time, Viala said.

Most business owners tend to value their businesses accurately, so when they go through the valuation process, they’re not usually disappointed, he said.

Viala did not disclose specific rates his firm charges, but said it varies depending on the size of the business. The company doesn’t charge for valuating a business, but makes money when the sale closes.

Bizbuysell Lists Arkansas Offerings

Many firms like Cantrell-Viala post businesses for sale on Web sites such as Bizbuysell or with the International Business Brokers Association.

As of April 2, Bizbuysell had listings for more than 230 Arkansas businesses for sale.

These ranged from two “national quick service sandwich” outfits in Fayetteville and Fort Smith for $35,000 to a “C-stores & bulk oil/fuel delivery services” operation in Montgomery County for $65 million.