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How do you sell a business when you have no money to pay for professionals such as appraisers, brokers, etc.?

I own a small landscaping company; all equipment is fully paid for and I have a good client base (most of whom never pay on time) but I have no more money to finance it's growth and no credit. I want to sell but don't have the money to pay for brokers, accountants, appraisers, etc. I don't know what to do.

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Answers (4)
Armin Laidre
ExitAdviser.com
Fast-track Your Business Sale
NV

Absolutely doable..
It's called self-serve small business sale ;)
Start from here:
http://exitadviser.com/how-to-sell-business.aspx

Aug 8, 2014
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The BAF Group LLC
MD

I am afraid that the problem you will find is that you will not get much for your business, at this point. Most Buyers will not pay for "potential", particularly in a business such as yours. (Businesses that sometimes generate payment for potential are in the software and e-commerce areas; the difference is that in these businesses, the Buyers are investing in the "intellectual property" involved.) The equipment you bought is largely depreciated the moment you take possession. And the rule of thumb for the price is a function of the last 12 months of income, rather than the amount anticipated going forward. One variance to this concept is if there are long term (three years or so,) of contracts that lock the future income in, for the prospective Buyer. But without three (3) years or so of profitable history, you are somewhat sunk. A way to overcome this may be in doing an "earn-out". You determine the value of your customer base and the Buyer pays you a fraction of that amount, essentially to allow him/her to take possession of the equipment; the balance of the payments are made as a percentage of the sales that result over the next several years, from your current customer base. Make certain you are covered with a well written Contract of Sale.

Aug 4, 2014
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Thank you for your input. My business has lots of potential value but I am obviously not a good business woman. I did one thing right. I hired an excellent operations manager who has helped the company to grow from a handful of properties to almost 100 weekly maintenance contracts, snowplowing, driveway sealcoating, the design and installation of brick/stonework patios, etc. What I did wrong was in spending all my savings on equipment (literally all but one piece of equipment is fully paid for), salaries, insurance, etc. and never got a line of credit. Now we have multiple large jobs we COULD do but no money to pay the workers, buy gas for the equipment, pay insurance, etc. while the jobs are being done. Any deposit a client would give would only cover materials (typical of this business). Yes, I need a business manager but can't afford to hire one. Thus, I'm seriously considering selling - with hope to another landscaping company who will keep my current operations manager and my crews on salary so they don't loose out due to my stupidity and lack of business management skills.

Aug 3, 2014
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The BAF Group LLC
MD

The only up front cost you might routinely anticipate is one for your accountant. If you have been paying your taxes and filing them appropriately, 95% of the documentation has already been done. If you have not been filing, then you certainly have a problem. You do not need to have an appraisal done. In fact, even if real estate is involved, getting an appraisal is virtually worthless because, if the buyer is not paying cash, he/she is normally obtaining a loan from a bank or the SBA. The lender is going to require an appraisal, even if you did one last week; they are going to want to use their own appraiser in order to validate the value of the property. So getting your own appraisal is unquestionably a waste of time and money. Finally, the majority of brokers in our area – and it could differ in your location – do not require money in advance. Their fees are paid for as a percentage of the sale, and that commission or fee is paid at settlement from the money you receive from the buyer. The only thing that you have missed, and which you probably need to have paid in advance, is for an attorney to review a contract of sale, once you receive a bona fide offer. There is no way to escape that and I highly suggest that you do not ignore an attorney's advice, in putting together such a contract. I guess what I don't understand is how lucrative can this business be, if you have no money? Does the business really have value?

Aug 1, 2014

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