Ok, so you've made up your mind you want to list your business for sale.
That's not a bad idea. Many business owners build businesses and sell them afterward.
In your case, I'm sure you have a price in mind already.
That said, you should know that the process of selling a business is not as simple as finding a buyer and reaching an agreement on the spot. There are lots of legal and financial factors to be considered.
In most cases, you'll need to enlist a Brokerage Firm like MergersCorp M&A International, who puts established businesses for sale, an accountant to handle the financial aspects, and an attorney to draft the legal documentation as you proceed.
Below are a few tips to guide you every step of the way.
1.) Know the value of your business
Already you know how much investment you've made in your business. You know the ROI you've been generating. And you also know how much profit/loss you've been recording over time.
But one thing you can't possibly know is the "true value" of your business. And that's because you're no business valuer.
In order to ensure you aren't selling your business for cheap or pricing it too high, you must hire a business appraiser to get a valuation of your business.
After carefully analyzing every detail of the business, an appraiser will come up with an estimation of the business's worth. This estimation is what you'll use as a gauge for your listing price.
2.) Hire legal and financial experts
Now that you know the value of your business, you might be tempted to start approaching friends and potential buyers with your plans to sell the business.
But before doing that, you need to seek legal and financial counsel.
The process of selling a business is a rather complex one, and you want to ensure you aren't making any mistake in your decision-making as you proceed. Therefore, it's crucial that you hire the necessary financial, legal, tax, and business advising professionals to ensure the process goes as smoothly as possible.
3.) Keep the news away from the media
News about you trying to sell your business will never go down well with clients and customers.
If anything, customers might get the wrong impression about the status of the business and might decide not to patronize you for the time being.
Therefore, you need to ensure the details of the sale are only known to your innermost circle.
4.) Hire a broker to help list your business for sale
It's nothing to be ashamed of if you cannot find potential buyers for your business by yourself. In fact, many owners who sell their business do so with the help of brokers.
So why should yours be any different?
Although a broker might ask for a little commission in return for listing your business for sale, their reputation and popularity in the industry will ensure that you find a good buyer for your business in little to no time.
Although there are lots of names in the industry today, the go-to destination for most CEOs looking to sell a company is MergersCorp. Founded by Stefano Endrizzi, MergersCorp has earned a global reputation for helping clients confidentially buy and sell privately held businesses, aligning the interests of all parties for mutual success and satisfaction.
Amongst the list of companies they sell include SAAS, Technological Companies, E-Commerce, Fitness, Food, Pet, Architectural, Agricultural, and so much more.
5.) Preparing Documents
Having listed your business for sale on the MergersCorp's website, the next thing is to ring your accountant to gather and review your financial statements and tax returns dating back a couple of years. From employees' salaries to profits/losses, equipment sold with the business to existing leases, and everything else in between, these financial statements must reflect everything about the business that relates to money.
6.) Finding a Buyer
According to SCORE, it may take between six months and two years to sell a business.
Once you have prospective buyers, here's how to keep the process moving along:
- Get two to three potential buyers just in case the initial deal falters.
- Find out whether the potential buyer pre-qualifies for financing before giving out information about your business.
- Allow some room to negotiate, but stand firm on a price that is reasonable and considers the company's future worth.
- Put any agreements in writing. The potential buyers should sign a nondisclosure to protect your information.
- Try to get the signed purchase agreement into escrow.
You may encounter the following documents after the sale:
- The bill of sale, which transfers the business assets to the buyer
- An assignment of a lease
- A security agreement, which has a seller retain a lien on the business.
In addition, the buyer may have you sign a non-compete agreement, in which you would agree to not start a new, competing business and woo away customers.