Selling a business doesn’t have to be a process to fear. It can go much more smoothly with efficient planning and working with key advisors. Doing important prep work can help you avoid problems during the sale process and significantly boost the value of your business and post-sale profit.
Plan Your Exit Strategy
Some business owners have to exit their business unexpectedly due to illness or relocation, but most owners can plan when they would like to sell the company. Even if you have owned your business for a short time, you should plan the timeframe for when you want to sell it and be prepared. Meeting with advisors such as your attorney, accountant and business broker early on in the process will help you best position your company for sale. Additionally, many large strategic buyers are currently proactively contacting businesses in their industry to see if they can be acquired. If one of these companies come knocking at your door and make you a good offer, you want to be ready.
Work with Key Advisors
Make sure that your attorney is reviewing your corporate policies regularly. Keep good financial records, and backup information such as invoices and client lists, for several years. These pieces of information are important during a sale. Work with your financial advisor to determine how much money you will need from a sale and have a business broker conduct a business valuation. You want to know the value of your business ahead of time. The worst situation is when an owner is ready to retire, and they learn the business isn’t worth the amount that they need to do so. Advisors can also alert you to factors within your business that can affect value such as customer concentration, key employees, unfavorable lease terms and non-transferrable contracts. Solving these problems before putting the business on the market will boost value and make the process go more smoothly.
Understand that it Takes Time to Sell a Business
Most businesses take 6-9 months to sell, but some can take a little longer. A good business broker will conduct a business valuation and prepare a comprehensive business prospectus, which can take several weeks but are key elements for a successful sale. Don’t wait too long to put your business on the market. Once you become tired of running the business, it rarely does as well as when you enjoyed it and rushing the sale process may lead to you having to take a lower offer and less favorable terms than you would have otherwise.
Be Prepared to Negotiate
Business brokers work on your behalf to find you the best buyer and the best price and terms for your business. However, you rarely get everything that you want in a deal and will need to find some common ground with the buyer. Discuss with your broker ahead of time the things that are important to you so they can advocate on your behalf. You don’t want to be mid-deal and uncover that some terms are “deal breakers.” Luckily there are many eager buyers, both individuals and strategic buyers, looking for a business right now, so you may have multiple offers to consider and can choose the offer with the price and terms that work best.