When a business owner decides that it’s time to sell a business, they may not know where to start. Owners must plan to make the process easy and profitable. Consider the following steps when planning to sell a business.
Why Sell a Business?
Buyers will want to know why you are?selling your business. Some owners are ready to retire. This is certainly understandable to potential buyers. Sometimes in this situation, the seller will even agree to continue working with the new owner as they transfer ownership. Sometimes business owners decide to sell their company because a business partnership did not work out. Not everyone can work together, so this, too, is understandable. In unfortunate circumstances, a death or illness makes it necessary to sell a company.?
There are other reasons for selling that buyers will question before they consider buying. For example, if the owner is exhausted from the owning the company, a new buyer may be hesitant to buy it. It could mean that the company is extremely successful, or it could mean that the company has been poorly managed. A potential buyer will want to know more about this situation.?
Organize the Books
Before selling a business, the first thing to do is collect all of the business financials. Organize the bookkeeping and gather financial statements. Understand the numbers side of the business. How much is the company worth? How much debt does the business have? How many customers does the it currently serve??
The sooner the business owner knows this information, the sooner they can make adjustments. Sometimes it is in the business’s best interest to pay down some debt or cash out small shareholders. Some business owners find it worthwhile to have a professional complete an?independent audit?of the company to give prospective buyers confidence.
Turn to Professionals
Even if a business owner is familiar with all parts of a business sale, it is wise to hire some professionals to help make the process go more smoothly. A business broker, accountant, and transaction attorney can assist with the sale. Personally, owners should have their attorney, CPA, and?estate planner?involved to make sure they are considering issues such as the structure of the deal and tax planning. A team of professionals will make sure the process goes smoothly.
Be Cautious
It can take months to close a deal on a business. During those three to twelve months, the business should continue to operate as normally as possible. The company should continue to meet revenue goals and other key metrics.?
Potential buyers should sign non-disclosure agreements during the selling and buying process. A letter of intent is the best document to secure a sale, but it is not a contract. Several pitfalls can prevent a sale. The longer the sale takes to happen, the more chances there are for obstacles to arise. Keep things moving as quickly as possible.?
When you’re considering how to sell your business, it’s essential to consult experienced New York business brokers who can guide you through the process.
After the Business Sells
Once the business sells, consider what to do with the money. Whether retiring or re-investing, everyone needs a plan to maximize the funds from the sale. Planning for their financial future is important as business owners transition into a new role.?
Selling a business is a process that can be emotionally draining. Planning can help facilitate a smooth transaction that will satisfy both the seller and the buyer.
