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New Rules for Selling Your Spa

By: William J. Lynott
Posted: October 26, 2010, from the November 2010 issue of Skin Inc. magazine.
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Don’t make the mistake of thinking you can charm potential buyers with excuses or rosy projections of what your spa could be under different circumstances. Instead, you can expect them and their accountants to cast a jaundiced eye on your past and present performance as a gauge of actual market value.

Prepare a seller’s document

Although you may never have heard about a seller’s document, when you decide to sell your business, it can be an extraordinarily valuable tool. A seller’s document tells prospective buyers about your business and why they should buy it. A good one will contain, at the minimum, a brief history of the business, financial highlights throughout the past few years, observations about your local market, prospects for growth and an honest look at the competition.

Although large businesses often create elaborate brochures with glossy photos and lengthy chapters, most spa owners need not go to such lengths. A two-page summary neatly typed and grammatically correct is often enough. The content is the most important aspect. If you engage a business broker to sell your business, she will be able to help you prepare your seller’s document.

How can you tell if it will do the job? “A good seller’s document will answer 80% of the questions that a prospective buyer is likely to ask,” says Marsh.

Decide what you will tell employees

For a variety of reasons, many sellers are reluctant to tell their employees that the business is up for sale. According to Marsh, “That’s a mistake. They’re going to find out eventually. In fact, it’s almost impossible to keep employees from knowing that a business is for sale. When they eventually find out, resentment is certain.”