“Sellers Beware!”

Required reading for every business owner!

Don’t send them any money!!  There are a number of out of state (outside of Nevada) very phony business marketing and promotional firms.  They solicit you by fax or mail or email asking for some basic information on your company.  You contact them and they take a telephone profile on your company and have one of their “experts” contact you, possibly in person, and develop a marketing profile based on a business valuation that is usually unbelievably and excessively high.  Then they will ask for a prepaid upfront national marketing fee anywhere from $10,000 to $100,000, depending on their trumped up valuation.  You pay it, they place a few ads around the country and you are on your own.  Rarely a buyer is found, but if a sale is made, it is at a more sobering price because of your desire to sell.  They will still collect an additional 10% to 15% fee on top of the pricy up front fees and they won’t do your deal for you or represent you at the closing!  These companies are in violation of all kinds of laws in Nevada and you are well advised to send in their information to the Nevada Real Estate Division.  If you receive one of these offers, please call me.  I can help you.

Don’t use a broker and save the fee…..   Lets start from the beginning.  First, you need to understand that a business sale is known as a “bulk sale” from a legal definition position.  In Nevada, there are no bulk sale laws on the books!  That’s correct, NONE!  Legal positions for legal remedy are only available if you can prove misrepresentation or fraud.  By the way, have you tried to prove that lately?  In most cases, the bad guys won’t deal with a firm such as First Choice or me because they know that there is a very high probability of being exposed and flushed out.  The worst business sales stories that I have ever heard are all when a business owner tries to sell their business directly to a buyer.  You know, to save the fee?  I have had grown men and women call me, after the fact, asking and almost begging for my assistance to help them recover.  Well, at that point, it’s too late.  It is worth the fee alone just to assure you that a buyer, with a hope and a prayer, believes he or she is going to buy your business and that it will work for them and subsequently will bring their cleared funds to the closing table.  Call me, I sell businesses for a living, you don’t.

If a business broker agrees with you about a high listed price, watch out!!   On a good day, there are only about 45 full time business brokers who are licensed by Nevada to sell businesses.  As in any industry, some individuals are much better at what they do than others.  Although most of the trained and qualified business brokers are at our office, the others “out there” are more than anxious to bring in a listing, almost at any price and terms.  Understand, with only a hand full of occasional exceptions, very few businesses sell for more than 3 times provable net income from all sources.  (Includes seller’s discretionary expenses commonly know as “add backs”.)  So if your business is determined to be priced at 5 or 6 times total net income and the business broker is recommending this price, you have a big problem.  You will probably never sell your business at that price and that business broker should know better, they are misleading you.   You’d better call Ed Smith!

“Yes, I primarily sell homes but I have a buyer for your business….”   My advice?  Hang up! Selling businesses in Nevada now requires a Business Broker license in addition to the Real Estate license that was always required.  Why?  Because selling businesses is so difficult, in part because there is very little knowledge based resources available to these residential agents.  They don’t know anything!  In addition they do not have or understand the appropriate paperwork to protect you and the buyer.  Most of them are a law suit waiting to happen.  Don’t go there even if he or she is a friend or neighbor!   When in doubt, call Ed Smith.

My accountant said my business is worth….   What a nightmare.  Accountants serve a very important service to business owners.  However recommending business valuations is not necessarily one of them.  The basis and formulas they learned in college have very little to do with market value reality.  First, businesses sell differently in every major population area.  Second, their old college formulas don’t fit market realities and current sales experience.  Third, the vast majority of accountants have never bought a business, operated a business or ever even sold a business.  You need an active full time well experienced business broker to perform this service.  Call Ed Smith

My brother-in-law, who works in a bank in Chicago, says my business should sell for…   Lord, give me strength!  Everyone’s friends and relatives want you to succeed, do well, get the best price for you car or business.  Let it all end there.  These well intended folks are the last people from which you want to receive advice.  They really haven’t a clue about business valuation.  With all do respect to their intentions, they don’t do this for a living.  I do, so call me.