How to Begin the Process of Selling Your Business

No matter who you are or what kind of business you run, the best sales tip I can give you is to start planning early. Getting an early start on putting up a business for sale should allow you to ultimately enjoy a faster and more productive transaction. Let’s take a look at some aspects to look at.

Get Your Financials in Order

Make sure all financial statements and projections are ready. Look at things like outstanding liabilities. Look at your customers and the size of your business. You should have a firm understanding of the ins and outs of your business and how it will appear to a prospective buyer. Some organizations even decide to get an independent audit of their financials to make sure there are no issues. It should come as no surprise to you to learn that companies with disorganized or incomplete books have much more trouble selling.

When you look at your financials in advance, you can begin the process of removing all personal experiences or unnecessary expenses from your financial statements. While this will increase your tax liabilities, it will increase your profitability. Buyers will want to see the maximum amount of profit, and that may also help them with their lenders.  Additionally, companies with good, clean financials tend to sell for more money than ones that do not.

Think About Debt

Some business owners opt to cash out minority shareholders or even pay down debts in order to prepare a business for sale. When debt is involved, it can work against allowing things to progress in a streamlined manner. While it’s clearly not impossible to sell a business with debt, it’s going to make things more challenging as it increases the level of risk on the buyer’s behalf. This is another good reason to start preparing early. If you can achieve the goal of eliminating debt, it will eliminate that potential obstacle.

Determine the Business Value

If you have a realistic idea of what your business is worth, it will help ensure that your sale goes as smoothly as possible. It is more challenging to find buyers for businesses that are priced in a way that is out of line with the market value. It’s possible to do a little research on your own. When you talk to advisors with business sales experience, they will give you honest insights into the value of your business. The next step would be to get a third-party appraisal. This will be a thorough analysis that looks at various aspects of your organization as well as the specifics of the market.

Soul Searching

Figure out your goals and get very clear on your reason for exiting. Prospective buyers will want to get clear details on your reasons for leaving and your future plans. If they feel the reasons are obscure or being sidestepped, it can give them pause.

Secure a Team of Professionals

Find the advisors you trust and make sure they are in place. You don’t want to be scrambling to find advisors at the last moment. In addition to a business intermediary, you might want an M&A attorney, tax advisor, and accountant. These professionals can work together as a team to ensure that your goals are achieved.