As the owner of your own business, you’re probably accustomed to handling everything yourself, especially if you’ve built the business from the ground up. However, when it comes to selling your business, you will definitely want to make sure you hire experienced professionals to assist you with every aspect of the process, from valuation to tax concerns to the actual transfer of ownership. Here is an overview of a few of the most important things to know about selling your business.
There may be many reasons to sell your business, from a need to liquidate assets to a simple desire to get out of the business and start something new. However, don’t just assume selling out completely is your only option!
It is quite common for sellers to transfer ownership of their business without actually leaving the business. Many buyers like former owners to stay on with the company as managers. If you are interested in this option, be sure that everyone’s responsibilities get outlined in writing before the sale is finalized.
Another option you may have is a partial sale. This might be useful if your business has two or more distinct units, one of which is struggling. Selling the struggling unit can relieve you of a burden and give you cash to invest in your remaining business.
One of the most important aspects of selling your business is finding a fantastic broker. The broker will be responsible for advertising the sale, meeting with prospective buyers, negotiating on offers, and handling the closing and escrow procedures. A well-connected and well-respected broker will be able to leverage their network of contacts to help you find better, more qualified buyers and probably also get you a better price. The only down side is that the broker will take about 10 percent of your sale price as their fee.
In order to set a price on your business, you need to obtain an accurate valuation. This valuation will be based on factors like your market position, earnings, and assets. In order to get an accurate picture of your earnings, most potential buyers will want to see financial statements prepared or at least reviewed by an outside accounting firm. Typically profit and loss statements and balance sheets from the past five years will be required. Your accountant can prepare this paperwork and also help you sort through the numerous tax issues related to selling your business.
In order to ensure that your interests are protected and that you get the best price for your business, it is highly recommended that you consult with an attorney. Before selling your business, you will need to create a prospectus that describes your business. In order to ensure that your prospectus does not include statements that could expose you to litigation (like promises regarding future earnings), you should have an attorney review it. You should also have an attorney go over the sales agreement with you, to make sure that you fully understand and agree with all the terms.
With the help of a great team of brokers, accountants, and attorneys, you’re sure to get all the information you need about selling your business at top dollar and under the most favorable conditions possible.