For many small business owners and entrepreneurs, there comes a time when it’s best to move on—whether that’s to retirement or another venture. But, before you can transition to the next stage in your business career and life, you must know how to prepare a business for sale. Selling your business will likely be the biggest financial deal you’ll ever make, so it’s vitally important that you're properly prepared for the entire process. Below, we’ll explain the basics of what you need to know, including documents needed to sell a business, how to determine your company’s net worth, and more.
For many business owners, the prospect of selling the business after years of pouring every effort into growing the company can be emotional and difficult. That’s a major reason why it pays to structure a plan to prepare for the sale. Remember, it’s crucial to use the same care and patience that you employed to grow and sustain a business for your business sale. Keep reading for the business broker’s checklist for selling a business.
What important steps are needed to prepare your company for sale?
Determine the company’s actual worth.
There are a lot of formulas for valuing a business. Buyers may base a purchase offer at least in part on the value of the assets in a business, the cash flow, gross revenues, annual growth and other factors. The sale price generally depends on profits, and, in most cases, the sale price is multiple of the business’s profit. Business owners can obtain valuations from a number of sources, including a certified business intermediary.
Be sure your records are up to date.
You want all of your hard work to pay off in the sale, so be sure you have current, detailed records that provide an audited assessment of the company’s financial position and future projections. Having transparent and organized records will make your business more attractive to potential buyers.
Remember your staff is an important asset.
The loss of key employees during a sale can kill the deal. Key employees may be crucial to the ongoing success of the company. Assess which employees are prepared to stay with the company through the transition and which aren’t.
Assemble a team of experts.
No matter how independent you are, the sale of a business isn’t something to handle on your own. A business intermediary will take some of the load off your shoulders, so you can spend time running the business when it’s needed most. Keep in mind that the sales performance of the company during the time it’s on the market is crucial, so working with a qualified business intermediary to sell your business will allow you to focus on the ongoing operation of the company. Business intermediaries know the ins and outs of mergers and acquisitions and take pride in what they do.
That you know how to prepare a business for sale; all that’s left is to assemble your team. If you own a company in the Seattle, Washington, area, Sound Business Brokers can help with our comprehensive business broker services. Contact our staff today to begin the process for your business.
