Are you selling your business? Follow these five steps to ensure a smooth and profitable process.
- Selling a company is more than just finding a buyer. It’s about taking the proper steps to transfer ownership successfully.
- By taking the proper steps, you can increase your chances of selling your company and increasing its value.
- A broker can help you find the best buyer for the best price.
- The article is intended for business owners considering selling their company independently or through a broker.
Selling your business can be a complicated process that comes with a lot of challenges. Before you seal the deal, a lot can go awry. You may not find a buyer or seller at a low price. Or there could be a breach of confidentiality. You can reduce these risks by taking the necessary steps to ensure a smooth transition and a successful sale.
Although the process of selling a business may differ for each one, there are some common steps you should follow. This guide will help you to sell your business at the best possible price.
How to sell your business
Take the steps below to ensure you get the best deal and the smoothest transfer of ownership.
Keep your financial records clean and well-documented.
Poor or weak financials are the No. 1 reason companies don’t sell. Poor or vulnerable financials are the No. You must also pay taxes and report a profit in your tax returns. The financial data of your company is crucial to the future sale. This step should be done with your accountant or tax professional to help you form the basis for your company’s sale and valuation.
Potential buyers will scrutinize the financials of your business since they are the basis for their valuation. The more documentation, financial statements, and information you can collect, the better.
Estimate the value of your business.
You may have a good idea of your company’s value. It could even be priceless. Your business has a fair market value, and a professional can help you determine it. You can maximize your company’s value by having an expert examine its financial stability, historical sales and expenses, and future performance.
The valuation process involves an evaluation of your business’s finances, products, and services, as well as its marketing strategy, management team, and business model. The valuation process will consider everything relevant to your company’s health and potential.
Choose a reliable broker.
A broker can guide you through the complex business selling process and will do much of the heavy lifting. A good broker will be worth much more than what you pay.
What should a broker do to be successful? To begin with, they should follow these actions:
- Perform a business evaluation and provide advice on the range of values.
- Keep confidentiality.
- Create a process for multiple bidders to make offers about your company.
- Due diligence is essential to a smooth sales process. Many deals fail because due diligence is not performed.
- Advertise your business and connect you with qualified buyers.
- Facilitate the buying process.
- A third party can aid negotiations.
- Introduce resources to financing and funding.
- Coordinate with lawyers, accountants, and other advisors.
- Make the best possible deal for both parties.
Find a pre-qualified buyer.
- It would help if you only accepted serious offers when selling your business. What is a severe business offer? Even if they have the best intentions, buyers must be able and willing to complete a transaction. Otherwise, you’ll be wasting your valuable time. Before you start getting excited, ask the right questions.
- Asking questions in any conversation is an excellent way to get started.
- Is the buyer pre-approved, or do they have the required funds?
- Do they have any experience, and are they familiar with the business?
- What is the buyer’s intention for the business once they take control? This question is essential if you are concerned about the future of your business or former employees.
Close the deal and finalize your contracts.
- It’s also the most complicated part of the deal. Finalizing legal contracts and dealing with messy final negotiations are necessary to avoid the agreement failing at the last moment.
- We recommend hiring a business lawyer for this phase of the process. Your broker may have several lawyers in their network, but you might find one alone. You want to ensure that they are in your corner as they will be looking over every detail of your contract. Even the slightest error could ruin a party.