Maximize Your Business Sale 

Daveed

Expert Tips from Business Broker Scott Hite

Imagine spending years building a business that’s become part of your life. Now, it’s time to transition—whether you’re looking to retire, pursue a new venture, or move on to something different. Selling your business can be complex, and finding the right buyer to carry on your legacy can be challenging. In our recent podcast episode, I was joined by Scott Hite, a seasoned business broker who shares invaluable insights on navigating the sale process smoothly and successfully.


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The Role of a Business Broker

Scott Hite, a business broker with over a decade of experience, has helped sell hundreds of small businesses, primarily "Main Street" businesses like coffee shops, retail stores, and small service providers. Scott's expertise spans years in both Portland, Oregon, and Louisville, Kentucky, giving him deep insight into what it takes to make a business sale successful.

For Scott, the broker's role is part matchmaker and part educator. “The process of selling a business is something most owners only go through once or twice, so they’re rarely familiar with it. My job is to represent sellers and ensure the process is as smooth and rewarding as possible," he explains.


Key Considerations for Selling Your Business


1. Understand the Buyer-Seller Perspective:
One of the biggest challenges in the sale process is bridging the gap between the buyer's and seller's perspectives. Scott emphasizes that buyers and sellers rarely see eye-to-eye on value, which is why a broker’s job involves facilitating understanding on both sides. "The buyer wants a fair deal, and the seller often has emotional attachments to the business,” he explains. Managing these perspectives is crucial for a successful transaction.

2. Preparing for Valuation – The SWOT Analysis Approach:
When assessing a business’s value, Scott uses a SWOT analysis (Strengths, Weaknesses, Opportunities, and Threats) to determine an income multiple. His process focuses on creating a realistic valuation that will be attractive to both buyers and sellers, especially in his niche of smaller Main Street businesses. He notes, "A coffee shop in Portland has a different market than a larger business that might attract private equity—my valuation process factors in the unique dynamics of each small business."

3. Confidentiality in Marketing
Unlike real estate, where a "For Sale" sign can attract buyers, businesses must be marketed discreetly to avoid alarming employees or customers. Scott's approach involves broad, generic advertising with limited details. "We can't put a ‘For Sale’ sign on a business storefront,” he says, “so I use platforms like BizBuySell to attract serious buyers while keeping details confidential."

4. Financing and the SBA Loan Process
When it comes to financing, Scott explains that smaller businesses are rarely eligible for traditional SBA loans under $200,000. For those that qualify, the process can be lengthy and complex, which is why a significant portion of business sales involve owner financing. “An owner carry means the seller agrees to finance part of the sale, which helps many buyers get into a business they might otherwise not afford,” he says.

5. Transition Support
Scott notes that 99% of his business sales involve some form of transitional training, where the outgoing owner helps the new owner settle in. This transition period can range from a week to several months, and it’s especially crucial for buyer confidence. “A turnkey business needs a smooth transition,” Scott says. “Buyers expect to generate cash flow from day one, and training helps make that happen.”

Tips to Maximize Your Business Sale

As both a tax consultant and a former IRS auditor, I work with business owners to create a tax-efficient plan that not only helps save on taxes now but also maximizes the value of their business when they’re ready to sell. Here are some insights Scott and I discussed:

  • Start Early: The sooner you prepare your business for sale, the better. Cleaning up financials, addressing operational inefficiencies, and establishing a clear record of profitability all contribute to a higher valuation.

  • Know Your Audience: Much like writing, selling a business requires knowing your audience. Presenting financials that are clear, accurate, and organized builds buyer trust and increases your chances of securing a higher price. A clean P&L statement shows potential buyers that your business is well-run and reliable.

  • Track Add-Backs and Owner Expenses: Many business owners write off personal expenses to minimize taxes, but these should be clearly categorized. This helps buyers understand what expenses would disappear post-sale, thus boosting perceived profitability.

  • Increase Goodwill: Goodwill includes intangibles like customer loyalty, vendor relationships, and brand reputation. These are hard to quantify but crucial to your business’s value. Scott emphasizes that goodwill plays a major role in small business transactions: "Goodwill can be one of the most valuable assets in a small business sale. It’s often what makes the difference between an average sale and a profitable one."

Final Thoughts: Plan for Your Future

Scott’s advice boils down to preparation and transparency. As a tax planner, I encourage my clients to think about an exit plan long before they’re ready to sell. Whether you're ready to retire or just exploring future options, taking steps now to organize your finances and improve your business's marketability will pay dividends down the road.

Selling a business is not just a financial transaction; it's a transition of your hard work, your legacy, and your future. Scott’s guidance is a reminder of the importance of planning and the value of a trusted broker by your side.

For those interested in learning more about selling their business, Scott Hite is an invaluable resource. Reach out to him:



Remember, whether you’re thinking of selling now or in the future, it’s never too early to start planning. By taking the time to prepare, you’ll be better positioned to get the best possible return on your hard-earned investment.

For more insights on business finances, tax planning, and preparing your business for sale, explore related articles on Anvil Tax’s blog:

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