In our final issue of Succession Planning, we will discuss the process of selling your business to a third party when the options of selling to a family member, employees or managers are not viable solutions. Selling your business can be a complex process and could be the single most important business transaction you have ever pursued.
Selling a business requires preparation. In many ways it is like selling your home. You want your home to look its best in order to maximize the value you receive and the same will hold true for your business. The business should not only “Look Good” from a physical perspective but it should also look good from an operational and profitability perspective. It is important therefore, to have a defined operational structure and pristine books and records.
Use An Expert
Selling a business also requires full time attention, and any business owner who has sold a business on their own, will tell you it is a tedious and stressful process. It usually ends up hurting the business because the owner is not equipped to deal with all of the headaches associated with the sale process. By relying on a Business Broker to manage the sale you can focus on increasing your business value while not worrying about the sale process. Having an experienced broker who understands the nuances of selling a business will prove to be an invaluable asset.
Confidentiality is crucial to the success of any business sale. You do not want your employees, suppliers, lenders or vendors to know your business is for sale. Employees may be fearful of losing their jobs and leave, suppliers and vendors may be reticent to offer attractive terms and lenders may refuse to extend credit. An experienced broker knows how to market the business while maintaining confidentiality.
Your broker will work with you to analyze your operations, finances, market potential and industry trends. As the business owner, you want your broker to craft a business profile that presents your business in the most attractive way possible. Pricing the business properly is one of the most important factors in the success of the sale process. Pricing it too high and there will be little interest, too low and potential buyers may be suspect that there is something wrong.
Structure & Negotiations
A business broker should know how best to structure the sale from a legal and tax perspective and identify the best type of buyer for your business be it strategic or financial. Filtering potential buyers is an important process that one should require of their representative. Your broker should present only qualified buyers for the business and cull those who are “tire kickers”. All of the information flow, documentation, negotiations and support through the due diligence process and closing should be quarterbacked by your broker allowing you to focus on the day-to-day operations of your business.
For a more in-depth discussion of the process discussed here, or if you are looking toward the possible sale of your business, please do not hesitate to contact us for a free consultation by phone (732) 741-7024 or email firstname.lastname@example.org visit our website www.tworld.com/monmouth.