If you enjoy running your own business, selling it may be the furthest thing from your mind. But the reality is that eventually an opportunity to sell will come, whether due to your own life changes or a perfect buyer walking in the door. Planning, often years in advance of the sale date, is necessary to get the most value for the love, sweat and tears you've invested. Here are some tips to stay prepared:
- Assemble a great team. Selling a business is a complex process, especially as you
grow larger. You're likely to need three kinds of professionals to help:
an accountant, to help review and produce clean and easy-to-understand
financial statements; a lawyer, to create the necessary legal documents
and help you negotiate terms; and a trusted business broker, to evaluate
the worth of your business and find buyers.
- Develop your exit strategy. With the help of your advisory team, create a clear
picture of what selling your business might look like. Outline the risks
and opportunities that could affect the valuation of your business.
Planning out an ideal scenario as well as a plan B will help you avoid
getting backed into a corner and selling at a discount.
- Clean up your financials. As you get closer to selling, go over your business
financial statements as well as your tax returns from the last three
years. A broker will like to present a clear and compelling financial
picture to a client, and that will include a year-to-date financial
- Have a plan to improve sales. The worst time to sell is when sales are declining, even
if it's just a temporary or seasonal dip. Part of your planning should
include some tactics to boost your sales and cash flow, such as increasing
marketing and promotion, liquidating bloated inventories or collecting on
- Be prepared to evaluate buyers. Be prepared to take a calm approach to any offers you get.
You don't want to jump at the first offer, and many offers that seem too
good to be true often are. Lack of solid financing is often an issue, so
work with your business broker to find buyers who have been prequalified
by a lender.
- Have your after-sale plan down. Often a buyer will want to include a clause that the previous owner stay on awhile as an advisor. Make sure that the advisory period lined out in the contract isn't longer than is comfortable for you. Finally, work with your accountant on a tax-efficient plan for the proceeds of your sale.
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