Checklist for Selling a Business
When you get ready to sell your business, you may feel like you’ve gone in over your head. It can seem a bit scary at times. The simple truth is that selling a business can be a bit intimidating. After all, smart buyers come to the table knowing quite a bit about your business and what it’s worth, and they want the best deal possible. What can you do to make sure you’re ready to market your company and sell it for as much as possible? This “Selling a Business Checklist” can help you make sure everything is ready to help your company take its next step forward – new ownership.
Selling a Business Checklist
Learn More About What Your Business Might Be Worth:
- Many companies either overvalue or undervalue themselves, and if you come to market in either position, you could be in trouble. Instead, you should seek a third-party valuation of your company to get a true estimate of what it’s worth. In most cases, this kind of valuation will help you understand how every aspect of your business contributes to its value; from your inventory to discounting your debts and liens. Keep in mind, though, that this process should be done at least three years before you sell your business.
Build an Exit Strategy:
- You can’t simply market your business, sell the paperwork, and walk away. That thinking will help ensure the sale fails. And if it does manage to go through, it will probably be for less money. Not only could it also be a serious problem for the new owner, but it might be a seriously sad experience to walk away from everything you worked so hard to build. If you want to make sure your company stays successful well into the next owner’s tenure, prepare an exit strategy that includes who will take over, what needs to happen on day one of your exit, and how to move forward. It may even help the new owner feel a bit more comfortable.
Carefully Prepare Your Financial Records:
- Maybe the most important part of the Selling a Business Checklist. Potential owners want to see as much data as possible before they purchase a business, and if you don’t have your financial house in order, you could be in serious trouble when it comes to finding a buyer. New owners want to avoid as many red flags as possible, so work with your accountant to prepare plenty of documentation for them to look over. Make sure you include your tax returns for the past three years as well as your profit and loss statements. You may also want to offer additional information, like accurate forecasts and projections, so they can see what the business truly has in terms of earning potential.
Create Open Communication With Your Team:
- If you’re selling the company, you’ll want to let your team know as soon as possible. They need to understand what (if any) role you’ll be playing in the new company and what might happen as your company moves forward. Offer an open door policy during this time so that your employees can ask any questions they might have as the sale of your company moves forward.
Work with a Broker:
- Why pay a fee to a broker when you could try to market your company on your own? Well, a broker is going to be your best friend when it comes to getting the price your business truly deserves. The best brokers know how to market your company, who your best potential buyers might be, and what to say to attract other potential buyers. What’s more, though, is that they will often prequalify your buyers to prevent the deal from falling through at a later date.
Ready for the sale of your business? This Selling a Business Checklist can certainly help make that happen, but so can the team at AMB. Learn more about how we can help you design the ideal exit strategy and conduct your business valuation!