You are probably reaching retirement age and may want to sell your business within the next few years. That is why you want to know the things you can do to prepare your business for sale.
A business sale can be completed over one year so you need to remember this when planning your exit strategy. Below are the basic steps you can take to make sure your business is ready for sale:
Get a Realistic Idea of your Business’ Worth
Getting a business valuation from a professional will provide you with a basis to gauge buyers offers and an idea of how much net to expect from the sale. Also, a business valuation will tell you the market position, strengths, weaknesses, and financial situation of your business. You can get valuations from different sources such as accounting firms, investment banking firms, and regional business brokers.
Ensure your Books are in Order
In general, as possible buyers evaluate your business, they will ask you to provide a three year’s worth of financial information. If you want to impress buyers, you want to show formal statements. Also, this will make it easier for buyers to do their due diligence.
Understand How Profitable your Business Truly Is
The majority of privately held businesses claim different non-operational expenses. If your business is one of these, ensure you have supporting documentation for such expenses that can include your personal vehicle lease, moving expenses, or infrequent expenses you have incurred.
Partner with a Financial Advisor
If you have told yourself to “sell my business,” always consult with a financial advisor to help in planning your financial future. Also, you should understand your personal and corporate tax situation to recognise options in terms of deal structure.
Put your Legal Paperwork in Order
Take the time to review your incorporation papers, licencing, permits, leases, vendor contracts, customer contracts, and others. Ensure they are readily available, up-to-date, and in order.
Have a Succession Plan in Place
If you are crucial to your business, you need to consider management succession. This way, the new owner of your company has somebody to turn to for help running your business once you exit. Create a succession plan before you put your business up for sale.
Determine why you are Selling
Possible buyers will want to know the reason you are selling your business. Be ready to articulate your reasons without turning them off.