Business owners spend their time finding ways to grow the organization. They rarely stop to think about the future when the time will come to sell. When this day arrives, they aren’t sure how to go about the process. Every business owner needs to do the following things and avoid certain mistakes for a successful sale.
Amass a Team of Advisors
When trying to sell your business, gather a team of advisors to assist with the process. The team may include a business broker or investment banker and tax advisor. Many owners consult with their accountant and a transaction or mergers and acquisitions attorney. They know with this team they will get good advice and a fair price for the venture.
In addition, many business owners choose to consult with their personal tax and financial advisors as well as their estate planning attorney. Regardless of who a person chooses to surround themselves with during a business sale, they should always work with a company specializing in professional valuations of businesses.
Get a Professional Valuation of the Business
Always get a professional valuation of the business. This valuation provides the owner with a better understanding of the company’s assets and how much it should be sold for. The independent valuation provides a true estimate of the worth of the business. Have this valuation conducted early, so any changes that need to be made to increase the profitability of the organization can be implemented and given time to work. This valuation is also important when a company is looking to be part of a merger or acquisition. The potential buyer will want to know how the company has grown over the years, and a true valuation will provide the owner with room to negotiate for a better deal.
Don’t Be Greedy or Emotional
A person spends a great deal of time and energy building a successful business. When the time comes to sell the venture, they may overprice the company because their emotions are wrapped up in the process. This business has become their baby, and the sentimental value often leads them to think the company is worth more than it truly is. Don’t make this mistake.
In addition, don’t become greedy. A person might choose to hold on to their business when the market is good because they feel doing so will allow them to make more in the coming months and years. The market then dies down and they end up selling and making significantly less. By not being greedy, a business owner can avoid this problem and ensure they get a fair price.
Don’t Hide Critical Information
Always be honest and open when sharing a business. Due diligence will ensure every secret comes out as the sale moves forward. During this period, the buyer learns all the details of the business and whether they truly want to make the investment. Share all company statements with the potential buyer and disclose key information. However, the current owner retains the right to restrict access to the employees during this time. In addition, the owner determines how the potential buyer can contact the business as the process moves forward.
Selling a business is never easy. However, the time often comes when this must be done. By learning from others, a business owner can move through this process easily and with few bumps and bruises when it is complete. They can then move on to the next chapter of life.