10 Tips For Selling Your Business

Maybe you bought your business. Maybe you started it from scratch. Maybe you took over a family enterprise. Whichever the case, you’ve undoubtedly invested a great deal of time, energy, and resources in your business. When you decide to sell, you need a winning strategy for getting the most out of the sale and you may want to consider the following advice.

Prepare in advance - mentally and physically.

Define your priorities and determine what it is you hope to get out of the sale. Spruce up the place physically – paint offices, clear out storage areas, work on the exterior. You also want to be sure to address any outstanding issues that could scare off an interested buyer. Your goal is to present the business in the most attractive, realistic light to qualified prospective buyers.

Gather documentation.

Professionally audited financial statements assume great importance in establishing your business's credentials. Work with your CPA to prepare a package that includes income statements, balance sheets, tax returns, accounts payable and receivable reports, copies of mortgages and notes, existing contracts and leases, along with a detailed analysis of the business and market it serves.

Seek out - and listen to - expert advice.

No matter how good you are at running your business, when it’ time to sell, you need to call in the experts. Your CPA, attorney, and a M&A specialist can provide invaluable help in preparing the business for sale and obtaining its optimum value. Once you've assembled a winning team, follow its advice.

Price it right.

There is no simple formula or rule-of-thumb for putting a price tag on your business. Determining a business’s value is a complicated, highly customized process and one that is best left to a professional business appraiser. Your financial records for the last five years or so, along with information concerning your sources and uses of funds, and the value of real estate and equipment you own, will be helpful in setting a realistic price. Prospective buyers will also be interested in your competitors, the markets you operate in, and local and national industry trends that affect the business.

Time it right.

Deciding when to sell your business is important. Both you and your business must be ready. You need to determine what the company is worth now and how its value may change in the next few years. While a prospective buyer will want to see historical financial data, he or she is likely to be more concerned about your business’s growth potential and the future prospects for your industry.

Target prospects.

Prospective buyers might include your competition, suppliers, customers, individual investors or entrepreneurs, existing management or employee groups, or members of your family. Brainstorm with your team to identify entities that might be interested in your business.

Keep it quiet.

Don’t be tempted to discuss your intention to sell with everybody you meet. If word of a possible sale reaches the wrong ears, you might lose customers, key employees, or credit, any of which could have a negative impact on your sales effort. Be sure buyers are qualified before you release proprietary data. And once you enter into negotiations and start to disclose valuable information, insist on the prospective buyer’s confidentiality.

Be flexible.

How much of the purchase price do you need to receive at closing? Are you willing to finance part of the sales price? To what extent are you willing to stay on after the sale? Will you agree to a non-compete agreement? As with most things in life, you’ll need to make compromises. It’s a rare sale that meets all of a seller’s objectives – or all of the buyer’s. The more flexible you can be on the terms of the sale, the more likely you are to receive top dollar for your business.

Assume nothing.

Maintain a business-as-usual attitude and run the business as if it will be yours indefinitely. If you don’t, it just might be.

Relax and enjoy. Adequate planning and professional advice should result in a sale that is rewarding both financially and personally. You've worked hard at your business, now it's time to enjoy the rewards and the freedom that come with its successful sale.