How To Sell Your Business in 7 Steps?!
Whether you’ve built an empire or poured your heart and soul into a business for many years, when the time comes to sell, it can rank among the most momentous events of your career.
No matter the size of a business, the reasons for selling, or the valuation you have in mind, there are seven critical steps you should follow for the most significant returns and the smoothest possible transaction.
1. Work Out a Fair Valuation – And Boost It Where Possible
There are many different options available for those seeking to value their business. You’ve already been through the start-up phase and made the financial mistakes that come with it. When cashing out, it’s more important than ever before to get things right.
It’s a no-brainer to optimize returns when you sell your business, and the business valuation represents the last exciting number in the entire operation – no matter how long you’ve been there.
A significant proportion of your net worth is likely tied to the business, so getting things right is essential. Whether you engage a broker, put your finance team on the case or even do it yourself, this is one final stage of business ownership it’s vital to get right.
Assuming you’re not after a quick sale, you can take your time to ensure you receive the best possible valuation. There are short-term opportunities to increase valuations without affecting revenues, like cutting costs and acquiring assets, that can take your preferred price to the next level.
2. Make Sure the Numbers Add Up
You might have an accountant or even a dedicated finance team to ensure the numbers make sense in your business. But, when sale time comes around, they become even more vital than ever.
It goes without saying that a potential buyer will go through the numbers with a fine-tooth comb. Seemingly simple discrepancies and errors can jeopardize entire deals. If a buyer identifies an issue, they’ll assume there are more.
So, when your business is about to hit the market, make one final push to get the numbers right. It can be worth it not only to complete a sale but also to ensure you’ve got your valuation right.
3. Make Sure a Sale Is the Right Course of Action
The last thing you want to experience after finalizing a corporate sale is seller’s remorse. Most deals are well thought out by default, and many owners agonize over the final details not just for days and weeks but often months at a time.
Think about what you’ll do next, even at the most basic level. You’ll have plenty of cash in the bank, but you’ll no longer have somewhere you need to be each day.
It’s rare for business owners to regret a sale, but it’s a possibility and undoubtedly valid enough to make up a crucial step in the sales process.
4. Draw Upon Your Network
You don’t have to own the most significant business in the world to have built up a considerable contact list over time. Past and current employees, suppliers, customers, and more can often become closer on a personal level than their role in the company’s success might suggest.
If you have a mentor or trusted confidante, don’t be afraid to discuss the sale with them. Even if you’re sure about moving on, they might provide another angle – and they have your best interests in mind.
Your network likely also includes potential buyers. Finding someone to pay the asking price for your company need not be difficult, especially when you use a business broker. Still, you can gauge interest among other professionals and potentially find out how much they’d be likely to pay.
5. Consult a Brokerage
The chances are that your business plan doesn’t account for selling companies. But, just as you and your team specialize in whatever you do, there are experienced professionals dedicated to bringing buyers and sellers together – and achieving prices that suit everyone involved.
A business broker can bring much more than facilitating a sale to the table too. From valuing your business to advising on due diligence and non-disclosure agreements, they represent an outstanding investment ahead of the upcoming windfall.
6. Prepare Yourself for Due Diligence
There’s every chance that you expect a significant sum of money in return for ceding control of your business. Those with funds to spend are unlikely to part with their cash without understanding everything about what they’re buying.
They’ll conduct due diligence around the business, often beginning with the financials. Beyond that, they may wish to carry out site visits, view records and information and speak with your senior team.
The process is akin to hiring a consultant. Business as usual may be disrupted, and you need to ensure you have the information they ask for if you wish to ensure a smooth transaction.
Experienced business brokers come into their own here, as they can also advise on what a potential buyer is likely to expect, so you can work on getting your corporate data ready for easy access.
7. Have a Plan for the Proceeds
If you’ve spent years or even decades building a business, there’s every chance it will have consumed most of your waking hours. As touched on already, all too many business owners wake up one morning with a significant amount of cash in the bank but nothing specific to do.
You might be ready for retirement, moving across the country, looking for a new opportunity, or simply feel like you’ve taken the business as far as you can.
No matter the reasons behind the sale, it’s vital to create a personal continuity plan. Even if you want to take a year out from anything too stressful and simply live off the sale amount, it’s worth having at least a vague idea of what you want to achieve next.
Work With the Experts
When sale time comes, you’ve spent significant time working to become the best in your sector. Some might say you’re an expert. In the parts of the business where you lack expertise, you’ve made a point of hiring people that know more than you do.
While an upcoming sale means the end is in sight, that’s no excuse not to continue what’s worked so well for you so far.
If you have any concerns at all around finding a buyer, getting the best possible price, or ensuring a smooth transition to the new owner, a business broker can make a sale happen without taking a massive chunk out of your bottom line.
Launched in 2006, and with more than fifty years’ experience bringing together buyers and sellers in the corporate space, we can help you achieve your price goals, find the right buyer, and complete a stress-free handover. So get in touch with us today for no-obligation advice on how to ensure your business lands in the right hands and at the right price.