How to Sell Your Business
Selling a business can either be seen as a milestone or the toughest decision that an owner can make. However, regardless of why you are selling your company, it is important to get the most money for it. This means taking the time to prepare both yourself and the business to be put on the open market.
Why Are You Selling?
The first thing that you have to consider is why you are selling. If you are looking to exit the business as quickly as possible, it may be a good idea to list the company for less than market value to attract offers in a timely manner. However, if you are looking to secure a stronger financial future for yourself and your family, it may be worthwhile to stick it out until the best offer comes along.
How to Make a Business Attractive to Buyers
Prior to putting your company on the market, it is imperative that you do whatever it takes to make your business attractive to potential suitors. This means getting your financial and other important documents in order. It also means looking into ways to cut costs, increase revenue or settle any pending litigation against the company.
Generally speaking, buyers don’t want to be responsible for your past mistakes if they can avoid it. You should also make sure that there aren’t any challenges to trademarks, patents or other intellectual property the company has. Your attorney will likely be able to help with that.
Be Sure to Use a Business Broker
It is generally in your best interest to use a broker to conduct the sale of your business. This person will be able to solicit bids on your company and work to facilitate the due diligence process as well. Just like when selling a house, you don’t want to get personally involved in selling your company. Instead, you just want to be around to answer questions or gather documents needed to help close the transaction.
How Will the Sale Be Structured?
The structure of the sale could determine how many offers you get, and it could also determine if anyone is willing to meet your list price. A sale could be structured in a way that allows you to retain stock in the company. It could also be structured in a way that allows you to sell patents or other intellectual property separate from other assets such as land or machines.
Will You Be Asked to Remain With the Company?
The person or entity who is buying the business may be doing so because it has a strong brand. Of course, it may only have a strong brand because you have a strong connection with your customers. Therefore, you may be asked to stay with the company for a period of time after the sale closes. If you are looking to retire, this might not be the best deal. However, if you are looking for a way to cash in while also earning money for your family going forward, staying around may not be a bad idea.
Do Shareholders Need to Approve the Vote?
If your company is a public entity, a sale may require shareholder approval. The same is true in the event that the buyer is a publicly owned company. You should also allow time for regulators to look over the deal if their approval is necessary. These tasks could take weeks or months to complete, and your legal counsel will help guide you through these steps.
Selling a company can be a complex process no matter how large or small your organization is. Therefore, it is important to have a team of accountants, legal advisers and others who can ensure that you go through this process properly. Otherwise, you may not be able to sell your company or get as much for it.