Most business sales are usually once-in-a-lifetime events, and spas are no exception. For many spa owners, the prospect of selling their business after years of hard work can be difficult and even emotional. But this is not the time to take shortcuts—it is critical to use the same care and patience it took to grow and sustain your spa business.
But fear not. If you plan ahead and follow a few key steps, you can make the process a lot easier on yourself. Here are 10 tips to help make the experience a positive and successful one.
1. Know the value of your spa.
Inflated expectations can interfere with your advisor’s ability to negotiate the best value for you. A third party independent valuation will help you establish the true market value of your spa.
2. Carry on business as usual.
Don’t become so obsessed with the transaction that you ignore day-to-day demands. Your eventual buyer will need to see a healthy business, not one suffering from neglect.
3. Keep the sale process confidential.
A breach of confidentiality surrounding the sale of a spa can alter the transaction dramatically. When clients, employees, or vendors become aware of a potential sale, they get nervous with the unknown, and their natural instinct is to leave. Avoid this uncomfortable scenario by maintaining confidentiality.
4. Prepare for the sale in advance.
Be sure your records are detailed and complete for at least the past few years and do all pertinent legal or accounting housecleaning, as well as a physical sprucing up of the facilities.
5. Anticipate buyer requests.
In order to obtain financing, the buyer will need appraisals on all assets, plus information to satisfy any environmental regulations that may apply.
6. Achieve the highest price.
Because this can be tricky, you’re advised to let your intermediary, as a third party, create a competitive situation with buyers to position you for the best transaction value.
7. Be flexible.
Do not be the kind of seller who wants all cash at the closing, especially given the current market conditions. Be prepared to provide seller financing and other creative financing solutions to attract the right buyer.
8. Negotiate, do not dominate.
You may be used to being your own boss, but the buyer may be used to having his or her way too. With your intermediary’s help, decide what is most important to you.
9. Know that time kills deals.
To keep the momentum up, work with your intermediary, your accountant, your lawyer, and other experts who may be required to be sure that potential buyers stay on a time schedule and that offers move in a timely fashion.
10. Be willing to stay involved.
Even if the process has been exhausting, realize that the buyer may want you to stay within arm’s reach for a while. Consult with your intermediary to determine how you can best achieve a smooth transition.
Above all, remember that planning ahead is key. Too many spa owners fail to plan for the day when they will want to sell. Then something happens—most often a health problem—and they are forced to sell quickly. Rushing to sell can result in a failure to recoup the true value of the business. The best time to sell is when you don’t have to.—Domenic Rinaldi
@bio: Domenic Rinaldi is president and managing partner of Chicagoland Sunbelt, a business brokerage firm that focuses on helping people buy, grow, and sell businesses in Chicago and the surrounding Midwest area. He can be reached at [email protected].
Interested in buying a spa? Here are some tips to point you in the right direction.
Look Online
Newspaper classifieds include only a small portion of the businesses for sale in one area, while an online business marketplace is more expansive. Sites like BizBuySell.com and BizComps.com can provide estimates of fair selling prices for spas in your vicinity based on similar businesses in the area, gross income, and cash flow ranges.
Be Savvy with Sellers
Once you have found a spa that interests you, contact the owners,
representing broker, or whoever placed the ad. When asking about price, be sure to ask how much cash the seller requires for a down payment. Of course, you want to know about the asking price and how much money you could potentially make, but asking about the down payment first is key to knowing whether or not you want to continue with this spa.
Make a List of Questions
Be prepared to ask the seller any questions about the spa that were not addressed in the ad. Make sure to get all the information you need from the seller. For example, ask why the owner is selling the spa, and always be sure to ask the seller to provide documentation for any numbers provided. Don’t be afraid to have an accountant look at the numbers. He or she will be able to tell you if things don’t add up.
Visit the Spa
After all your questions have been answered and the spa seems like a good fit, ask the seller if you can visit the facilities. If possible, visit the spa without identifying yourself as a potential buyer, and make sure that you are satisfied with the appearance and location.
Don’t be Afraid to Negotiate
Overall, businesses typically sell for up to 25 percent less than the seller’s initial asking price. There is no need to settle for the numbers presented to you at the start without question.
Look for Seller Financing
Banks often aren’t willing to offer loans to purchase businesses.
Seller financing provides a way to finance the purchase of the spa
while also showing the seller’s confidence in the business.