Anyone can sell a business, but not everyone can extract the maximum value when they decide to sell. You may have a price in mind. After all, you have invested a lot of blood, sweat, and tears in building a successful business. But unless you take steps to prepare the business for your exit, chances are, you won’t realize the price you want, and the process will be tinged with disappointment and regret.
To make your business a better sale proposition, we have some useful tips.
Get Your Accounts in Order
Before you do anything concrete, like list your business for sale, make sure your accounts are in order. Any potential buyer will want to scrutinize your accounts in great detail, to check assets, liabilities, and revenue.
Needless to say, the books should be accurate. Businesses are usually sold based on the seller’s discretionary earnings. i.e., the financial profit extracted from the business on an annual basis. Any expenses a new owner won’t incur should be added-back, which bumps up the SDE figure.
This is one area where an accountant can help you out, by preparing financial statements in advance, so they can be included in a seller’s pack.
Approach a Selling Agent
Depending on the nature of the business you are hoping to sell, it might be worth approaching an agent to help you handle the sale. For example, if you were hoping to sell your CPA practice, Poe Group Advisors have buyers all over the country and can help you achieve your sale goals.
Sales agents operate in many business niches, and they have access to buyers looking for businesses just like yours. While using an agent means paying a commission, it does make life easier, and you are more likely to achieve a good price for the business.
Focus on the Strengths and Weaknesses of the Business
It’s important to get into the right mindset when the time comes to sell a business. Rather than getting too wrapped up in the notion that this is your “baby”, and you are letting it go, view your business objectively as a buyer would.
Are there areas you can improve upon? If so, look at what you can do to make the business more attractive to potential buyers. For example, if you are still heavily involved in certain areas, now is a good time to bring fresh blood in and slowly step back from the front line. Sellers tend to look less favorably on businesses where the current owner does a lot of the work and there is nobody in place to fill the gap when they leave.
Make Sure Your Employees are On Board
Always speak to management and employees before selling a business. If there are grievances and people are unhappy about the way the sale is being handled, it could impact the sale process. Buyers will be less enthused about buying a business if all the employees have quit or are actively looking for new employment.
Selling a business needn’t be stressful and you have every chance of realizing a good price for it but have an exit strategy in place long before you decide to depart for pastures new.