Introduction: Some Key Points
how this selling prep will help
Failing to properly manage the sale of your business can cost you. That is why you need a business advisor who can
- valuate your business,
- package your company for sale,
- screen potential buyers,
- and negotiate the price that works for you.
But First, there are some very important "prep" issues that you should review in order to get the maximum value for your business.
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business selling prep
How to Sell Your Business: You Have 3 Options
Sell the Company Yourself:
You can sell your business on your own through a network of business associations and contacts
Issues:
Listing and presenting your business properly. Don't forget that you need to manage your day-to-day operations at the same time you are selling your business. Your challenge is to present your business to a vast network of potential buyers from around the region and country.
List Your Business with the Media:
You could publish a small ad in targeted media plus list your business with online business-sell networks.
Issues:
Same as the first option. Plus, you have the challenge of keeping your sale confidential from your competition and employees.
Sell Through a Professional Broker/Advisor:
Let an expert prepare the necessary documentation and find qualified buyers. Plus arrange all related meetings to close the deal.
Issues:
Cost. Professional brokers perform services based on percentage of the closed sale. But those payments are generally re-couped since the broker understands the dynamics to maximize your value.
business selling prep
Pros and Cons of Each Method
Our advice is as follows:
- if you have a buyer or competitor who is interested in buying your business, then reach out to that person with the sale opportunity.
You may decide to use the professional services of the CFOne to prepare your business for sale as outlined in this guide for a negotiated fee. See our professional services. - If you don't have any buyers that may be interested in your business, enter into a contract with a the CFOne to prepare and list your business for sale.
Speed is the strategy you want to take. Move quickly before your markets or your competition negate the value of your business.
business selling prep
To Whom to Sell Your Business
Individual Buyers
- Corporate downsizing has brought into the market business managers who are looking for new opportunities. These qualified managers see themselves buying and managing an established small business close to home.
- Most of these individuals do not the have the financial means to purchase a business outright. They will likely seek financing through a SBA loan or in some cases, seller financing.
- These buyers often request a transition period where the seller will be engaged for up to a year helping the buyer assume the full transfer of the business. The seller is usually paid a fee for these services.
The Competition
- The competition may buy your business especially if you have a market niche or product-line that they want.
- Sometimes it is financially feasible to buy an existing operation than to take the time and expense to build one up.
- Buying you out will depend on the strength of your market position. The stronger the market position, the more likely the buyout.
- The competition can secure the financing to buy you out. They may engage your services for a period to ensure your customers remain loyal to them.
Businesses Looking to Expand Their Current Line
- Sometimes an established business in your related field is looking to expand their operations or to move into a new product line or service.
- It may be a lot cheaper to buy an established operation instead of setting up their own operations in a new market.
- These buyers generally have the financing to make a out-right purchase. They will likely request management to stay on for the immediate period.
Businesses Looking to Invest
- You may find an investment group looking for investment opportunities. These investment teams will buy companies to divest or merge with similar businesses.
- They will scrutinize a company very carefully. They buy companies that are in growing markets, have good financials, maintain key management, and meet their investment objectives. They will pay top dollar for a company if these basic elements are in-place.
- Investment Groups generally request that management remain in-place for the immediate period. In some cases, they will bring in their own management team.
business selling prep
Tips: Prior To Announcing The Sale
The decision to sell your business should be kept confidential among yourself and other select individuals for the following reasons:
Avoid Upsetting Your Employees
Any rumors of a sale can be unsettling for any staff. sale may prompt employees to seek other employment.
Some tips:
- meet with your staff frequently to update them on business plans
- speak privately with key individuals about your plans and assure them of continued success
- consider some pay raises, promotions, company picnics, etc., to maintain morale.
Keep the Competition at Bay
Once your competitor finds out that you are for sale, they might undertake some moves that can undermine your customers, suppliers, and creditors.
Rumors that "you will no longer be in the business" could damage the goodwill that you have developed over the years.
Some tips:
- touch base with your key customers — assure them of your continued service and business
- keep up good relationships with your suppliers and creditors
- pay your accounts on time
Move Quickly
Once you make the decision to sell, jump into it quickly. The longer it takes to sell, the higher chance your employees, competitors, creditors, etc., may undermine your continued operations.
Some tips:
- Have your financials ready for review
- Scrutinize and validate every potential buyer prior to showing them your sales sheet
- Make yourself available as needed
- Seek professional assistance from an advisor who can prepare the necessary documentation and keep things confidential and moving
Helpful Tools
Some helpful forms business owners:
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