How To Sell Your Restaurant, Bar or Nightclub

Coauthored by Steven D. Zimmerman and Jacob Zimmerman
August 2005 (Updated Release From 1996 Article)

Restaurants For Sale Online is an online tool that is helpful in marketing the sale of your business. Selling your business is not an easy task so we have provided some guidelines that have been successful for sellers in the past. You or your broker are responsible for negotiating the sales terms and conditions, including, but not limited to the following activities:

Valuation: Develop a target price which optimizes return to you but a price that is realistic to help drive solid leads.

Packaging: Prepare a complete descriptive financial and market profile created to represent the business to potential buyers. This package can also be used to market the business and protect confidentiality on such sales which are private. These portfolios are provided for the benefit of you and the buyer to fully understand what is included in the sale.

Marketing: An active network of potential buyers should be pinpointed as qualified prospects for your specific business. In addition to website marketing, we recommend local newspaper classifieds, and also doing direct bulk mailings to owners of similar businesses in your area. Many existing owners are looking for new opportunities, and may be looking for a business just like yours. (i.e. Someone who is trying to sell a Bar in Chicago, should acquire a database of all existing bars in Chicago and do a mailing with information regarding your listing)

Negotiation: We highly recommend owners bring in a qualified business broker for the negotiating process. To find a qualified broker, please see our brokers directory or visit the International Association of Business Brokers Website.

10 POINTS TO KEEP IN MIND WHEN SELLING YOUR OWN BUSINESS

1. Price realistically. Don't overprice or under price your business. If you price it too high you will scare away qualified buyers. If it's overpriced, many buyers will not make you an offer for fear of offending you. The longer the business is on the market the greater the chances of your employees, suppliers or customers finding out which can cause operational disruption from turnover during the sale.
    
2. Prepare a business offering package. Include the information that buyers need to see; i.e., leases and profit and loss statements. Buyers will lose enthusiasm if they have to wait for items to be produced so be timely in your response.
    
3. Bring the deferred maintenance up to date. Prior to putting the business on the market this is highly recommended. When buyers see items that need fixing then they often wonder about the condition of things they can't see. Sometimes the smallest detail will turn the buyer away.
    
4. Prepare a purchase agreement form prior to finding a buyer. You should be prepared from the beginning to take an offer. Either you, a business broker or attorney should have this prepared. This way you make it easy for yourself and the buyer to receive/make offers when you have a deal. Attorneys are sometimes slow in putting agreements together and the buyer's enthusiasm may evaporate if the purchase is delayed.
    
5. Look for a buyer in as broad an area as possible. Don't depend only on our website to produce leads. Although we receive a lot of traffic and interested buyers, only a fraction of the potential buyers are using the internet. The way to get the optimal price is to have as many qualified buyers as possible. Use local newspapers and direct targeted mailings. If you have a real high profile listing you may consider advertising in Nation's Restaurant New classifieds.
    
6. Qualify the buyers right away. You need to know about the financial strength and business skills of an interested buyer before you give out confidential information on your business or spend a lot of time with them. You can do this by getting a credit report and also interviewing them in a friendly discussion about their experience in the business.
    
7. Confirm your leases. Make sure your location and equipment leases are transferable before you look for a buyer. Many potential sales have blown up because lessors refuse to assign a lease. If your remaining lease term is short, negotiate a new lease prior to offering that business for sale. If you do not do this, the real estate owner can lease the property themselves and reap the benefits of your hard word.
    
8. Get everything is writing. Make sure that every agreement of the transaction is clearly stated in writing, including all contingency removals. People quickly forget what was said and not written which frequently leads to arguments and then lawsuits.
    
9. Get a deposit. Require a substantial deposit when you have reached an agreement with a buyer. The deposit should be held by a neutral escrow holder in order to limit your liability.
    
10. Follow correct procedures. If you are financing part of the sale, be sure the correct procedures are followed in order to protect your note. These includes making any necessary filings city/state of your location, suitable promissory notes, security agreements, etc.