It’s a complicated procedure to sell your business. There are a lot of hurdles to tackle, and many things can break down even before the deal is done. Although each situation is different, traditionally you can avoid the pitfalls of a bad deal by following a few guidelines.
This article goes over the steps involved in how to sell your business, get the top price for it, and have the ownership transfer go without a hitch.
What to Do?
Whether you are having financial problems, health issues, or just want to retire, you’ve decided that you want to sell your business. Whatever the reason you need to follow a few steps to ensure that everything goes smoothly for you.
Financials
Many businesses have a hard time selling if they don’t have good financial records. Make sure to pay taxes and have your tax returns showing a profit. Your financial records are vital in making a sale.
Working with a tax accountant or professional is recommended for this. Buyers will pour over your business finance records since they will base most of their decision on them. So, the greater the information, documents, and statements you have, the better for the sale of the business.
Don’t forget about how you present your data to potential buyers. Organization and using simple language rather than legal phrases will cut down on confusion and misunderstandings.
What is it Worth?
What’s your company worth? You might have a sentimental answer to that question, but every business has value in the marketplace. You need to figure out what your business is valued at. Obtain a professional to help you with that determination because you don’t want to scare buyers off because of an over-evaluation of your company.
They will analyze everything and compare your information to other companies that have sold recently. This will also help you figure out how much you should sell your company for.
Dependable Broker
Hire a trustworthy and reliable broker to help you throughout the sales process. It’s a complicated endeavor and a dependable broker is worth their fee. Research and get reviews and opinions of past clients to make an informed decision on which broker to use. What qualities does a decent broker have? What kinds of things will they do for you?
- Keep things confidential.
- Develop a competitive deal/have multiple interested parties.
- Be diligent throughout the entire process.
- Help with negotiations.
- Contribute financing and funding resources.
- Be in touch with accountants, lawyers, and other pertinent people.
- Get the ultimate deal for both you and the buyer.
The Right Buyer
As the seller, you want to only consider serious bids on your company. Everyone has great intentions, but you don’t want people to waste your time. To figure out if these offers being presented to you are serious, you need to go over a checklist of things regarding the potential buyer.
Do they have the right funding to buy your business? Or do they have pre-approval when it comes to funding? Do they have the right amount of industry experience? Are they new to all of this?
You want to make sure they know what they are getting involved with. Do you know what they want to do with the company after the transfer of ownership?
This is a vital consideration if you are genuinely concerned about what happens to your business and past employees. Lastly, find out the buyer’s timeline. Do they want to acquire your company right away or take a long time? You don’t want things to drag on unnecessarily.
When a prospective buyer evaluates your business, they will look to find any opportunities to expand the company’s sales. For example, they will look at your promotional expenses and the return on investment to see if there may be an opportunity to expand advertising and promotions to increase the size of the business.
If the prospective buyer sees that you are currently investing a small amount in Custom Feather Flags with your brand name and messaging, but that investment is resulting in large returns, they can conclude that when they buy the company, they will be able to increase the spending in this area and then increase the value of the business, which will increase their interest in your company.
Closing the Deal
Many business deals break down at this point in the process. This is where you must conclude contracts and negotiations and do it where things don’t fall apart. You have your broker helping, but it’s also a great idea to have a lawyer that is knowledgeable about business sales.
You can always find one yourself, but your broker might know some. You need to make sure they are completely on your side so they will be thorough with each contract point. Any errors at this point will cause a collapse in the deal.
Be prepared and organized. Look over and gather the following documents:
- Asset list
- Bill of sale
- Compensation clauses
- Escrow (sales money, closing, and transfer)
- Property transfer (intellectual)
- Purchase agreements
- Staff continuity and agreements
- Transition time/work agreements
- Warranties
If there are other documents to be included, the professionals that you have hired will help you through this process. After everyone is content with all the necessary documents, the next thing to do is to finish the deal and transfer your company’s ownership to the buyer. Then, you are free to do what you want to do since you have successfully sold your business.
Also read: Transforming Your Business with Business Management Solutions
