Tips on selling your business

Posted by on Aug 29, 2016 in Business | Comments Off on Tips on selling your business

Planning an exit strategy for your business can be vital for many reasons. Early planning has an umpteen number of benefits. If you are looking to raise capital for instance, having a plan in mind can give your investors a reasonable idea about the strategy. The conditions for sale can arise in many strange circumstances, such as at dinner with some likeminded people. Hence, you always have to be well prepared to make sure you are ready to get the while churning when you or your board make the call to sell. We’ve put together some pointers for you to consider when selling your business.

Firstly, make sure you and your management team stand together and stand strong. If your business is solely centred on you, then it’s not very attractive for potential buyers. If some of your star players or all are staying behind then it’s a great incentive for prospective buyers.

Timing is pretty important to so start planning the sale a year or two in advance. This will give you time to get all your information straight. You can even get an appraiser in to find an accurate valuation. This will help you gauge the offers on the table accurately.

Make sure you do your homework about the buyers so that you never ever waste time trying to sell to someone who isn’t serious in the first place. Sort out the internal mechanics too so that your employees don’t panic and any sale rumours. Make the situation abundantly clear to them. Any level of clarity on issues can help.

Get your statistics, books and financials in order. If you are able to clearly present your sales, customer, brand and infrastructure data it can go a long way in making you attractive. Smart buyers can take into consideration all the stuff you have planned for the future too. Make sure you present all the plans you have for the future.

Clear the shelf of any non-trading entities when presenting your company. You might have investment properties and things tied to your business, especially if it’s owned and run by you primarily.

Try not to bank on just a handful of bidders. At the end of the day, your business is just about worth the highest bid, so make sure you present it to many prospects. Your strategy, core values, products and prospects might align with companies that you wouldn’t even consider sometimes. Hence it’s better to put your cards on the table. Competition will also help drive the price up.

When you negotiate always try to be flexible but only if the bare minimum requirement is met. Never accept offers that are a reflection of what the books say now. Instead find a buyer who will pay for what it can be worth in the future. A reasonable balance needs to be found.

Following this make sure you get offers and agreements in writing. Stuff like confidentiality agreements and non-disclosures are essential to make sure everything is carried out within the law. You wouldn’t want any board members or outsiders tricking you. Competitors too sometimes can enter the process just to see if they can buy you out at a good price or take a look at your internal workings.

Patience is key to getting a good price for your life’s hard work. You would not want to be the person that took his or her time to build a great company but grew impatient during the sales process. Remember some people are in it to save as much money as they can so make sure you wait it out and stick by your principles and forecasts, till you match or beat the price you have in mind.

If you don’t have much experience in paperwork or even negotiation, you can hire a broker too. This will free up plenty of valuable time for you to focus on the running of the actual business, especially if the planning process started years in advance. Brokers can set up escrow accounts to make the process even more reliable.

Handling the profits of your sale is also extremely important as it acts as a stepping stone to what you want to do in the future. Tax consequences can be complicated based on where you live. Make sure you have a thorough understanding of the capital gains. The reason for selling the business will more often than not help you with how you spend what you earn. You can always try to keep some shares in the company at all times.