If you've decided to sell your business, there are a few things you should take care of before listing it to ensure that you not only get a settlement price you are satisfied with but to make the transaction process smooth and hassle-free for all parties involved. Here are the most important steps you should follow when preparing to put your business on the market.
Hire An Experienced Business Broker
Appointing an experienced broker should be your first point of call. Selling a business takes a significant amount of time and effort and if you're trying to maintain your role in the business at the same time, this can either see you highly stressed or one area getting neglected as splitting your time between the two can be a challenge. There's a lot of work that goes into selling and having access to the right kind of buyers goes a long way to bringing you quality leads. Well established brokers have exclusive contracts that they can market your business to which means you will generate more interest than if you were to sell on your own. The more interest there is in your business, the higher chance you have at increasing your selling price.
Business brokers are across all ways to market your business in the best light to bring you maximum exposure. They also interview interested buyers to ensure they pre-qualify to save wasting time. Brokers make qualified buyers sign a non-disclosure declaration form to make sure that confidential information about your business is not shared with others who aren't authorised to have access. They will also maintain uttermost confidentiality while in the selling process. Your business broker works in your best interest to get you the best price and can negotiate on your behalf.
In-Depth Analysis Of Your Business
You should extensively examine your company to present potential buyers with a comprehensive breakdown of the business. This is done by conducting a SWOT (strengths, weaknesses, opportunities, threats) analysis. This establishes areas that need improving, potential opportunities, parts of the business that are working and gives potential buyers a gage of how the business fairs in the current market. Doing this makes your business more appealing to buyers and puts you in a good position to bring attention to the positives, put strategies in place to rectify the areas that could be better and outline areas of growth which is crucial to getting the price you want from the sale.
Employees that you believe are vital to your businesses success should have their contracts looked at and amended before selling. You can negotiate the terms with them or offer them a contract that you deem fair for their contribution to the business. It is beneficial for a new owner to keep on existing staff that have a comprehensive understanding of how the business runs as this can greatly influence how successful it is. As well as updating your employee contracts, you should look at your supplier and customer contracts. For most businesses, they are key to ensuring continuous profit and long-term success. Not having these secured can see you lose potential buyers as building up these relations takes time. The new business owners will be essentially starting from scratch if they discontinue after you leave which is not an appealing selling point.
Sort Out Your Books
You will need to have sufficient paperwork to support the businesses finances, not only in the last year but 3 plus years is recommended. This can provide the buyer with an insight into the performance of the company and whether it is sustainable in low revenue periods. Having this in order and together can be very beneficial to the sale of your business. Some basic records you should have readily available include tax returns, financial, legal and compliance documentation.
Consider Your Lease
If the location of your business is primal to its success, you will need to consider this before selling. If you own the premises, you will need to decide if it's included in the sale or if you'll lease it to the new owners. If you lease the premises, you should ensure you have a decent amount of time left on the lease. It's best to have a chat with the landlord to see if they are in agreement to extend the lease to the new owners and check with your lawyer to see if selling has any hidden clauses you may not be aware of.
Get A Valuation
It's important that you get an independent business valuation done as you may think you have an idea of how much your business is worth, but you could be way off and if you're like most other people selling their business you will likely price your business too high which can deter buyers. A professional valuation can give you a realistic price based on other businesses like yours and the current state of the company.
Throughout this article, we have mentioned only some of the many important steps you should be taking before you sell. For a thoroughly detailed plan it's best to consult with an experienced business broker. If you would like a free consultation or some more information, get in touch with our senior team here at Morgan Business Sales to discuss your options.