Entrepreneurs need their own team to navigate the sales process.
posted by: Brian Caldwell
Sep 14, 2016 8:38:00 AM
If you’ve ever wondered what to expect when selling a business, I have answers for you. Here are seven tips to help you prepare and keep your bases covered.
When deciding to sell your business, the first question to dig into is: Why? Not only will your potential buyers and advisors be interested, so will nearly everyone in your personal and professional network. Whether you’re motivated by retirement, conflict, crisis, or opportunity, be prepared.
A business sale can take six months to a year – even a multi-year process isn’t out of the question. By taking the time to prepare your company for sale, you’ll stand out from those who don’t and appeal to wider range of buyers. Adequate preparation takes time and provides value.
Having a quality controller or finance director who isn’t also the owner is a good place to start. If you’re currently in those positions, know selling your business will be simpler if you hire for those positions.
Enlisting professional advisors can provide you with financial savings and help you navigate the selling process. Trust your instincts to know if you need help with accounting, taxes, real estate transfers, legalities, transactions, vendor relations, and inventory matters. Partnering with a good business broker or advisor can provide invaluable support.
Valuating a business is far from a black and white process. The amount of variables can be astronomical. Some industries use profit, revenue, and other use cash flow. Begin by obtaining benchmark data from within your industry, and remember to account for seasonality.
A breach of confidentially can put a serious dent in your plan to sell a business. If word of the sale spreads throughout the company, staff and customers may wonder how the sale could affect them and seek exit strategies. Work with individuals and advisors who guarantee discrete marketing and proceedings. Keeping your process confidential is necessary to maintaining your bargaining position.
Buyers understand good business – but you need to articulate your vision, and clearly identify your growth story. Preparation and focus is especially important during this progression. Knowing which information to share and how to handle conference calls can make or break the selling process.
You’ll need to determine who is the best buyer based on seemingly infinite variables, move through negotiations, and make decisions, line item by line item.
After performing due diligence, you’ll move into closing the deal. Closing this process involves significant negotiations and tying up any and all loose ends. You’ll need to navigate your way out of confidentiality, both personally and professionally, as well as arrange for final transfers before celebrating.
Selling a business can be a time-consuming and emotional venture. There’s a lot on the line at each step in the process, and having people you can trust and look to for advice is priceless. It may also be possible to receive free counseling from organizations such as SCORE, and your local chamber of commerce may offer relevant seminars and workshops.
Working in conjunction with a business advisor or broker can provide significant advantages in the professional, personal, and financial realm. Many who sell a business are doing so for only the first or second time, and partnering with experience can streamline the process.