The process of selling a business can be complicated, long, and frustrating. In fact, it can take up to a year or more to find the right buyer and quite a few months more to complete the transaction. Of course, some businesses never sell, mostly due to insufficient information about the performance of the company.
Throughout the selling process, you should have a team of professionals working on behalf of you and your business and that they are experienced in acquisitions and mergers (m&a). Quite a significant part of the process involves your m&a team getting you up to speed on the sales process and what’s required for you to sell your business for the best possible price and terms.
Be prepared to give up much of your time and put in quite some effort making sure you’re presenting your company in the best possible light. Remember, profitability will depend on the timing of the sale, reason for selling, business structure and operations, and more. Once the transaction goes through, however, you will need to have a smart plan on how to manage the profit, i.e. proceeds from the sale. In this article, we look at the critical steps to follow to sell your business.
Determine Whether It Is Saleable
You need to assess your business realistically to determine whether it is even saleable. You need to do this before considering any other action. If you are not sure whether your business is possibly saleable, try discussing the issue. You can even talk it over with someone you trust in your industry. If your business has been operating profitably for at least one year, it should be saleable. The same applies if it is a relatively new business with a clear path to profitability.
Consider the Reasons for the Sale
Once you decide to put your business up for sale, you need to think about why you are selling your business in the first place. After all, this is one of the questions potential buyers will ask you. Business owners who decide to sell their companies do so for one or more of these reasons.
- Death or illness
- Partnership disagreements
- Inability to handle the workload
Sell All Or Just Part of Your Business
Work out whether it’s all or just a part of your company up for sale. There is likely to be interested in the role of it, insofar as large companies are always on the lookout for acquisitions, and look for businesses that are proliferating, have synergy, or fit well with the existing business model.
Decide Upon the Minimum Selling Price
It is essential to determine the minimum price for which you would be willing to sell your business. However, you should only consider this minimum price after looking for the best bids possible.
Pick The Right Timing
To get the best price possible, you need to prepare for the sale at least a year in advance. Early preparation will help you improve your customer base, business structure and operations, and financial records. These improvements will keep your business running at peak efficiency and ease the transaction process for potential buyers.
Determine Whether To Use A Business Broker
If you choose to sell your business yourself, you will not have to pay a broker’s commission. This will help you save some money. However, Pacific Business Brokers can handle the awkward and frustrating steps of the selling process. This will give you the time to keep your business running. It is also the best option if you want to get the highest price and keep the sale quiet.
Prepare Required Documents
You need to gather your tax returns and financial statements dating back several years and examine them with an accountant. You also need to prepare a list of assets and equipment that will go with the business. Make copies of these documents, as well as a list of contacts related to supplies and transactions, to present to potential buyers.
In addition to being time-consuming and scary, the process of selling a business can also be emotionally draining. Therefore, you should consider speaking to a financial professional or a trusted friend who will help you put everything in perspective. The selling process can be long and frustrating; however, when done correctly, it can be highly worthwhile.