4 Things You Need To Know To Successfully Sell Your Business

What do you need to consider?

Someday, you might sell your business.

You may have planned for this all along, using a business sale as your exit strategy or wealth building plan. In other cases, the prospect of selling your business can be a surprising or even emotional issue.

Here are some things that you should be aware of as you prepare to sell your business.

1. See your advisors early

Many vendors leave their run far too late when it comes to involving their professional advisors in the sale process.

We can assist you together with a business lawyer in providing initial structure advice, preparing a good confidentiality deed prior to negotiating with potential purchasers and providing guidance during the negotiation period on issues such as employment, contract transfers, commercial lease issues, tax law, determining business value and tidying up a business ready for sale.

2. Know your business value.

If you don’t know your business value, you’re going to go into the sales process blindsided. The first logical step for selling a business is figuring out what buyers are looking at when they consider purchasing a business. There are two main approaches to determining a business’s valuation.

Asset Approach – Add up all your business assets and liabilities. What number are you left with? This is the asset valuation of your business.

Income Approach – The income approach to valuing a business is a simple assessment of the net present value of the business’s income stream.

Select whichever of the above methods gives you the best (highest) valuation. When you have a ballpark figure of your business’s value, you’re ready to go to market.

3. Know the best brokers in the business.

Unless you’re an expert business broker, we advise hiring a broker to help you sell the business. A broker is especially valuable in the later stages of a purchase process — negotiation, pricing, and the marketing strategies.

4. Know the perfect time.

Selling a business is all about timing.

When’s the “perfect time?” Here are some times you shouldn’t sell your business:

  • When you’re burned out.
  • When the company faces a catastrophe or disaster.
  • When you just want a huge lump of cash.

Here are some times you should consider selling your business:

  • When you are ready for a lifestyle change
  • You’re enjoying expert management.
  • During an upswing.
  • When the company is performing well within an underperforming industry.

Selling a business is a big deal. It involves major life changes, huge sums of money, and a whole lot of time.

The final feature to keep in mind is that a business sale will radically change your life. Therefore before you sell — before you even think about selling — consider your goals and visions for your future.

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