Whether you’ve led the business to great success and you’ve decided you want to go out on top or you’re moving onto another venture, preparing your business for sale and vetting potential buyers is a complex but exciting task. Here are a few tips business experts have if you’d like to sell your business.
1. Determine your business value.
Add up the value of everything the business owns, including all equipment and inventory. Subtract any debts or liabilities. How much does the business generate in annual sales? Calculate that and determine, through a stockbroker or a business broker, how much a typical business in your industry might be worth for a certain level of sales. Other than business value in number, consider the value of your business based on its geographical location. In addition, consider its potential strategic value to a would-be acquirer if there are business synergies.
2. Seek legal and financial expertise.
It’s crucial to hire the necessary financial, legal, tax and business advising professionals to ensure the process goes as smoothly as possible. There will be many details that come up for which you may be unprepared, so having the proper resources will be essential.
3. Keep it quiet.
Do the things you need to do first before announcing the transition to a new owner to your customers. You don’t want to put customers into panic mode or not be fully equipped to answer any questions.
4, Hire a professional business broker to help you with listing your business for sale.
A business broker will help give your business market visibility where you want it and will increase your chances of finding the best fit. A broker can also help you set a realistic asking price, and help you with marketing your business and contacting potential buyers on your behalf.
5. Set a realistic asking price.
If your business is doing well, it can be tempting to set a very high asking price. In reality, there are many factors that buyers will look at when considering a purchase. Consider profits, client relationships and the personal investment of time that will be required for the new owner to make the transition successful, and set your asking price accordingly.
6. Get the paperwork in order.
The legwork for the sale of a business starts long before you’re ready to put up a for-sale sign. All potential buyers are going to want to see taxes, financials and any existing contracts pertaining to your business. Take the time to get all of these things organized.
7. Get your offers in writing.
If and when several offers start coming in, it will be imperative to have things in writing to make accurate and proper comparisons. Price alone will not be the only factor to consider, so it will be useful to record the details of each offer to ultimately determine which is the best one.
8. Tie up loose ends.
It’s essential that you make sure you have handled all payments, late payments, defaults and promises. If you promised a team member shares in the company, even if you are selling, it’s time to do what you’ve promised. Having any loose ends may cause problems when you are trying to complete the deal, so make sure you tie up all loose ends, even the small ones.
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