Selling a business can be overwhelming.
Once the decision is made to step away from your company, the question remains: what next?
We’ve made a handy to-do checklist so you can navigate the process with ease and ensure a successful sale.
1. Prepare: Ensure all important records are up-to-date and anticipate buyers’ due diligence inquiries. Compile at least 3 years of financial statements and tax records, clean up your books, and resolve any outstanding legal issues. Prepare relevant documentation about business operations, assets, and more. To get the highest valuation for your business, look for ways to improve profitability and reduce costs so it is a more attractive deal for buyers.
2. Get it valued: Consult with a professional to receive an unbiased, realistic market value of your business. This stage will involve information analysis, such as financial statements, net income, seller discretionary earnings, lease, and the strength and weaknesses of your business.
3. Confidentiality is key: To protect your business and stakeholders, have a nondisclosure agreement (NDA) to anyone you are providing detailed information about your business. During the initial stages, only high-level information should be given to buyers to prevent sensitive information from being leaked.
4. Hire professionals: Outsourcing to professionals with the knowledge and expertise to guide you through the process will make you appear more reputable and well-informed to potential buyers. A business broker can help facilitate the sale, while an accountant will be able to assist with financial matters. Get an attorney on board to prepare a non-binding letter of intent to outline the terms and conditions of the sale, draft a comprehensive purchase agreement and finalize closing documents.
5. Identify buyers: When selling your business, it’s essential to identify the type of buyers who are most likely to be interested in acquiring your business, whether that’s individual investors, private equity firms, or competitors. Understanding the different categories of potential buyers will help you tailor your marketing efforts and approach the right audience, increasing the chances of a successful sale.
6. Purchase requirements: Decide beforehand if you’re willing to negotiate on price, and if you are, have a figure in mind as the lowest price you’ll go. Think about potential deal-breakers, acceptable terms and if you’re open to providing financing options to the buyer.
7. Post-sale transition: If you want to help smooth the transition for the buyer, develop a handover process that can implemented once the sale has completed. This can involve guidance on internal processes, training and ongoing support.
8. Prepare yourself: After putting years of hard work, dedication, and passion into running a business, the decision to sell can evoke a mix of emotions. Take some time to prepare for the change – talk to others, celebrate your achievements with the company, embrace the potential for new opportunities and stay focused on the future.
