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10 Steps to Take When You’re Ready to Sell Your Business

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Estimated reading time: 5 mins

At the end of many years of business operations, some owners may be ready for a change and want to either sell their business and start a new venture or get prepared to retire. For whatever reason, business owners can get the help they need from brokers who manage commercial sales and understand the in’s and outs of the transactions. A broker can give them sound advice and guide them through the entire process to avoid mistakes and get a real return on their investment.  

1. Get A Proper Valuation 

An official appraisal of the company shows how much the owner can expect to get if they sell the business and all related assets. The value is based on existing capital, investments, and projected earnings for the present inventory of products or how much the company will generate by completing services.

The appraiser must review all current financial records for the business and debts. The evaluation shows any problem areas that could depreciate the value of assets or cause slowdowns in earnings. Business owners can learn more about where to start by contacting CGK Business Sales now. 

2. Set Up a Listing Agreement

A broker can provide a listing agreement for the business owner who gives the agent the authority to sell the organization on the owner’s behalf. They can take prospective buyers on tours of the facility and show them what assets come with the sale.

Certain financial documents such as tax returns for the last two years should be readily available to the broker to show projected profits for the business. Brief details about new products are disclosed without giving away trade secrets to give buyers an idea of what they could receive if they purchase the company and take control over it. 

3. Get Your Financial Records in Order

The business owner must work with a licensed accountant to review their existing economic records and search for any inconsistencies or errors. The files must show all accurate data about the business, its costs, its overhead expenses, earnings, and how much they pay each worker. All the data helps buyers determine if the company is a sound investment and how much control the buyer has over implementing new financial practices that cut costs or address inefficiencies. 

4. Make Decisions About Assets

Whenever a business owner sells their company, all assets that are owned in the company’s name are sold with the business. However, the owner could keep certain assets if they are planning to shut down the business and discontinue some of their services.

They have the option to either sell the assets with the company, or the owner can sell the assets separately through a private sale. When working with a broker, the owner can find out which of these options generates the highest profits and greatest return on their investment.  

5. Create Plans for Workers

If the business will continue to operate, the owner must consider ways to protect their workers. The contract terms can include clauses that require the new owner to keep the staff on for a predetermined amount of time and enforce stipulations that the buyer must follow before firing an employee. If the owner plans to keep staff on with the company, they may need to complete a transition phase where supervisors are changed according to the buyer’s preferences. 

6. Create A Marketing Plan for the Sale

Once the business owner hires a broker, they will launch an advertising campaign to spread the word that the business is for sale.  They will place ads where buyers and investors will look for new opportunities for buying organizations and starting emerging ventures. The brokers have an entire network of investors who would like to purchase existing and established companies whenever the owner wants to retire or doesn’t have an heir to hand over the reins to. 

7. Screen Buyers Thoroughly

Brokers evaluate all offers that come in for the business and identify any potential fraud. They present sellers with only high-quality offers from known investors who are ready to buy. The agents work with lenders and other financial institutions to ensure that the buyers have the funds to purchase the business and are not making false claims.  

8. Negotiate a Fair Purchase Agreement

Buyers want to purchase a company at a reasonable price, and the incoming profits and valuation of the business define the baseline for offers. Investors are less likely to submit a higher than average offer unless the company is generating high profits.

If the company is in financial trouble, lower offers are possible. When selling the business, the owner must consider how much they are willing to accept based on all offers on the table.  

9. Settle Debts and Liens Against the Company 

After the seller has accepted an offer, they must make arrangements for any liens to be paid off on the day the wire transfer is completed. If there is a lien against the company, the buyer cannot get a deed in their name until the lien has been absolved.  

The seller can pay any connecting debts for their company with the purchase amount for the company. If they are contractually obligated to pay the debts, the amount is deducted from the purchase price and sent to the creditors. 

10. Create an Exit Strategy

The seller must have an exit strategy in place to determine when they will leave and the buyer takes over. They must set up arrangements for any debts accumulated after the date of the takeover. 

Business sales are complex and require a few years to prepare, and owners must find out everything they need to know ahead of time. A broker can provide insight into how to sell the business and get a fair and reasonable price. The agents understand how to create contracts for the seller and get great offers from buyers and investors. When selling through a broker, the business owner has an extra hand helping them with the process. The business sale could present some confusion for owners, and a broker can help them make better choices about selling their business and getting the best possible return.

 

About the author /


Simon is a creative and passionate business leader dedicated to having fun in the pursuit of high performance and personal development. He is co-founder of Applied Change, a Business Change consultancy based in the UK. Simon is also an Ambassador for Gloucestershire business. Simon is an Associate Member of the Chartered Institute of Professional Development.

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