You’ve worked hard and built a successful business, so you’re ready to sell. However, how do you ensure the right buyer gets your company at a fair price?
You can start by listing your business on a website. Other options include reaching out to industry contacts or business brokers. Ideally, you’ll identify buyers who are both financially qualified and interested in your industry.
Know What You Want
Knowing what you want is critical before you start searching for a business. This includes how much you can afford to pay, your goals and resources, and any other requirements, such as having a signoff from current shareholders or a legal action in progress.
Once you’ve established your criteria for a successful business, it’s time to get to work. Find a broker to help screen potential buyers and identify those serious about making an offer. Assemble a packet of information to distribute, including financial statements, tax returns, equipment lists, contracts, and other important documents.
According to professionals like Zack Schuch, being honest with potential buyers is essential, as highlighting the business’s strengths and weaknesses will help them decide more quickly. This doesn’t mean you must disclose ll of the business’s flaws, but be prepared to explain what areas will require additional investment or future attention. During discussions with potential buyers, try to meet in person if possible. However, if you must negotiate via phone or video meetings, ensure the discussion focuses on the topic rather than back-and-forth emails.
Find the Right Business
Many business owners must sell their businesses based on life events, health issues, or the need to change focus. Whatever the reason, preparation is critical to a successful sale. This involves hiring a professional to help with the valuation process, creating a selling memorandum, and clearing up any red flags that could slow down the transaction (e.g., employee contracts, intellectual property issues, and federal or state tax issues).
It is also a good idea to assemble the right team. This should include your accountant, lawyer, M&A adviser, and a broker with a strong track record in this area. This team will be invaluable in helping you get your business ready to sell and will ensure a fair and successful outcome for all parties involved. For instance, CEO Zack Schuch mentioned that you should ensure that potential buyers sign non-disclosure and confidentiality agreements. This will eliminate any casual inquiries and screen for those who are serious about buying your business.
Negotiate the Price
The price of a business is the main consideration for both seller and buyer. While it may seem like a simple number, it is a complex process involving many calculations and compromises.
After you’ve conducted a valuation and determined your ideal sale price, it is time to start the negotiation process. This begins with an unbinding written or verbal offer and typically includes a due diligence period during which you will have full access to the inner workings of the business, from tallying up inventory to reviewing financial records and analyzing customer lists.
Before entering negotiations, identify a list of “red lines” you’re unwilling to cross. Compromise where you can, but hold firm on issues imperative to your business’s success.
Close the Deal
In theory, closing a business sale seems simple: you sell the company for what it is worth and make a profit. In practice, however, there are a lot of moving parts that must be carefully orchestrated to make the process go smoothly.
Selling a business can be emotionally stressful. It can also be a huge financial undertaking. It is important to prepare for the sale and seek the help of professionals who can guide you through the process. For example, a business broker can screen potential buyers for you and ensure they are serious about purchasing your company. This will save you time and money by not wasting your attention on unqualified parties.
