I have this conversation with sellers all of the time. Just because we have an offer from a serious buyer does not mean we are done, there are several things that have to happen before my job is complete.
I do not mean to sound negative, but I have cashed many checks in my mind, that I have never received. Over the years I have learned that when the seller and I are walking out of the attorneys office with checks in our hand we can smile.
If you are selling your heating and air company, ESPECIALLY on your own, know that there are several things that must happen for the sale to take place and for you to get paid.
- Due diligence. This is the most thorough part of the process and where the buyer is going to make sure that everything you told them is true. They will often look into your CRM, check tax returns and bank statements, and anything else they can find to make sure they really understand what they are buying. Most contracts allow a buyer to walk away if they find something they do not like, so make sure that your business is what you have advertised it to be. If you are working with a broker, ask them to show you what they are showing to potential buyers so you can verify they have not painted a picture that is not accurate.
- Bank review. If financing is involved, the bank is going to make sure that they understand what they are lending on, and this will include a deep dive into your business. One of the most important steps in this process is an appraisal. If you have priced your business way over where it should be, and convinced a buyer to pay that price, you will still have to have prove to the banks appraisers that it is worth that price, and that may be challenging.
- Lease. If you do not own the property you will need to work with the buyer and your landlord to ensure a smooth transition of your business location. If you have not been paying your rent, or do not have a good relationship with your landlord this can prove to be challenging. I have had landlords completely end deals because the relationship was bad with the seller, and the buyer felt the location was important. If you own the property and it is being sold, valuation will be important at this stage of the process.
- Condition of equipment. This one is self explanatory, if you have not taken care of your equipment, do not be shocked when the buyer wants to lower the price or walk away.
- Maintenance agreements. I have written about this in the past, so I will not go into detail here, but if you have been prepaid for work you have not completed, a buyer will expect a credit for that.
- Inventory. Items such as capacitors, contactors, freon etc, up to a certain value is normally included in the purchase price. Inventory is normally done the night before closing, and that can derail the closing.
Please keep in mind this is not a complete list, only some items you need to be aware of as you work through the sale. Proper planning and a clear system will allow you to work through each of these items without concern.
If you have any questions on other items, or how you can better prepare for that sale, please send me back a note, or give me a call. I would love to help any way that I can.