Selling Your Business? Here’s 8 Things to Keep in Mind
You’ve worked hard and built a business, now it’s time to move to another phase of your life so, you’re selling your business. What exactly does it mean to sell your business? This article will look into the meaning and legal considerations involved in getting a business sold.
Business advisers will tell you that when starting your business, you need to think about an exit strategy. Selling your business is just one of the options to consider. While the best time to think about whether you plan to sell your business or not is right at the beginning, there’s nothing stopping you from considering that option much later.
Things to Keep in Mind When Selling Your Business
Next to starting your business, the decision to sell it is probably the most important you can make as an entrepreneur. Once you have made the decision to sell your business, there are certain things to keep in mind before you swing into action.
Timing is Everything (Usually)
A really important part of selling your business is timing. Understanding where your business is at every point in time is crucial. Understanding your market is key because there are times when certain markets are hot and that is when you need to sell. This knowledge can make the difference between getting a high offer or none at all.
Have a Solid Plan in Place
When starting your business, you had a strong plan in place. In the same way, you need to create a solid plan for selling your business. A savvy buyer would want to know why you are selling your business and several other in-depth information. Fact is, deciding to sell your business will make most buyers suspicious. Having a clearly written plan will help explain your decision to potential buyers.
Get Your Tax and Estate Plan in Place
Once you have your plan, the next step is to get in touch with a good business attorney and/or an accountant. This is so that they can look into the tax and estate implications for you and your business. It is important to put a tax and estate plan in place before you start shopping around for buyers.
Get Your Business Valued
Next, get your business valued. This is an important step in your journey to selling your business because it will determine how much you get for your business. This is not always an easy thing to do because emotions are often involved. However, a fair valuation has more to do with logic and facts than with emotions.
Engage a Mergers and Acquisitions (M&A) Lawyer
A vital part of your team is the M&A lawyer and choosing the right one is very important. The wrong lawyer can cause your deal to fall through. Therefore, be sure to gauge the capabilities of the lawyer you choose and ensure that you are both the right fit for each other.
Get the Right Broker
It is possible to work with the wrong broker, which is why business owners should take the time to identify the right person to represent their business. Working with a broker is important because brokers often access to a large network of other business owners, many of whom would be potential buyers of your business. However, it helps when you get a broker who understands your industry, your business and also has a realistic outlook about selling your business. It can perhaps even be better if the broker can also be a business lawyer at the same time, so you can kill two birds with one stone.
Discreetly Market Your Business
While it is the broker’s job to get buyers for your business, you will also need to market and promote your business. This can be a bit of a problem if you are trying to avoid panic among your staff and customers. So, the best way to do this is to discreetly reach out to specific people to help spread the word discreetly. This is also where a solid plan comes in handy.
Close the Deal
Once negotiations are over and both the seller and buyer have agreed to the terms of sale, the next step is to close the deal. This is done with a Purchase Agreement, which is a contract that contains the terms of sale.
It goes without saying that you must do your due diligence concerning the sale of your business, in the same way that the potential buyer will do thiers. One of the worst things that can happen to an entrepreneur is selling off your business to the wrong person. It is therefore important to carefully evaluate the capabilities of the buyer to keep the business running in the long term.
Finally, it is important to note that businesses are not sold overnight. Typically, it takes at least 2 to 4 years to get a business sold. So, patience is key.