Eighty-eight percent of business owners think their business will stay in the family for at least 5 years. Unfortunately, most of them are wrong.
Selling a business can be a complicated process.
If you’re not ready, it can be one of the most stressful things you’ve ever done. But if you do your research, plan, and get professional advice, selling a business doesn’t have to be painful.
If you are wondering what the key steps are in selling a company, this short, simple guide is for you.
Find a Broker Who Understands Your Business
A broker will work with you to understand your business, how it works, and what you’re looking for.
They can help you identify the best way to sell your business. They can also find buyers who have the right skills and experience.
Make sure you have all the information and records at hand to give your broker an accurate picture of your company.
Price the Business
The next step is to work out a price. You may want to price the business based on what you think it’s worth. However, this can be dangerous.
Instead, try looking at similar businesses that have sold in your area. This will give you an idea of what buyers will pay for similar companies.
Advertise the Business for Sale
The next step is to advertise the business for sale as soon as possible.
This helps you get the word out there. It also gives potential buyers time to prepare their offers.
Make sure your ad is clear about what’s included in the sale so that there are no surprises when you negotiate with buyers.
Review Offers
The next step is to review the offers.
You can filter out any offers that don’t meet your criteria or those from buyers who won’t be able to close in time. Make sure that the offer includes everything you need to walk away from the business with a clean break.
Evaluate the Buyer’s Ability to Close on a Deal
You must evaluate the buyer’s ability to close on a deal.
This means that you should ask for proof of funds, a letter from their bank, and a copy of their current business plan. You should also ask for personal financial records, including tax returns and bank statements.
If the buyer is a corporation, you may need to get additional documentation from their corporate lawyers.
Finalize the Deal With the Buyer
Once you’ve completed the deal with the buyer, you can close on the business.
Read the escrow agreement and interpleader action document carefully and make sure they’re consistent with your expectations. Be sure to review the documents with your lawyer and accountant.
For more on interpleader action, click here.
Selling a Business Requires Planning
You should have a plan in place before you start selling a business. Make sure you do your research, find a good buyer, and get everything in writing.
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