Most business owners hope to exit their business by selling. Sometimes no other successors want to take over the business. In other cases, the business owner always intended to liquidate the business. No matter why you want to sell, these tips can ensure a favorable price and successful sale.
Sell for the Right Reasons, at the Right Time
A business owner’s illness or desire to retire rank among the most common reasons for selling a business. These are the worst reasons. It’s unwise to sell a business because you have to. Not only does this make you more desperate and less careful; it also allows the buyer to use your circumstances against you.
So what are the right reasons? Selling a company is a lot like selling a house. You don’t tell the buyer you’re selling because the home is too small. You say you want a different location, or a shorter commute. When you sell your business, highlight the new opportunity you are pursuing—not the shortcomings of the business.
Be Clear About What You Are Selling
Consider which assets your business offers. The value of these assets is dependent on their quality. You should also consider whether you want to sell in an asset sale, in which everything except for the corporation is up for grabs, or a share sale, in which you sell everything, including the incorporated entity.
Get an Accurate Company Valuation
You must determine your company’s actual worth. That worth is only as much as it will fetch in the marketplace, and determining that price can be challenging. A number of valuation methods, including future earnings approaches and assets assessments, can be effective. But none can be used in isolation. You must consider market and other factors when determining value. This is why it’s so important to work with a professional business valuation expert. Doing so can even make your company more appealing to potential buyers. Several court cases have even acknowledge the distinction between valuations from qualified business valuators and those offered by someone who lacks this education and competence.
Get Your House in Order
When you’re planning a sale, don’t let anything slide. Taking the time to ensure your business is well run can pay off, offering a higher sale price and a smoother negotiation process. Consider how your business will look to a buyer—whether or not you’re excited about continuing to run your business.
Maintain careful records. Reduce liabilities by settling lawsuits and making timely tax payments. And ensure your processes are clearly and thoroughly documented.
Get Professional Assistance
Selling a company is infinitely more complex than selling a house, and has just as much emotional investment. An expert helps you maintain your distance, and offers the objectivity you need to succeed at a sale.
Selling a business is a complicated undertaking. Take the time necessary to do it right. Careful preparation and taking advantage of professional resources can ensure a premium sale price. Get help to set a fair price and navigate the sales process, since you may never have done this before. Your team, however, will have decades of experience. Use that experience to your advantage.
It takes time to prepare, but being realistic and making your business as attractive as possible can pay big in the end.