For all business owners, there will come a time when you decide to sell your business but many people fail to realise that the process of selling can be just as hard work as running the business itself...........
When a buyer shows interest in your business, the first question they are likely to ask you is "why are you selling the business?" You should answer truthfully, as hiding the truth will only make things difficult for you later when the buyer finds out for himself.......
A business transfer broker is a person that will be very helpful towards selling your business and although some sellers do not use them, if you are a first time seller, they can be an essential ingredient.......
If using a business broker, it will be down to them to value your business. However, it would still be wise to value the business yourself so that you can relate to the price that the broker has specified.........
Using assets to value your business can be used if your business is considered asset-intensive i.e. the assets heavily contribute to the level of profit that is generated.......
The value that you place on your business, whichever method you choose, will more than likely never be the price that you receive: it merely forms the starting point for negotiations.........
Before you put your business on the market, it is important that you prepare the business first as well as yourself: as soon as your business hits the market, it will be the start of an intense period.
Another key element in selling the business is producing a sales memorandum (sometimes known as a Selling Book) which basically is a detailed (but short) document that describes your business inside and out.......
The following is a brief guide to how you would create a selling memorandum: Start with a few paragraphs that emphasises the stronger aspects of your business and a brief overview of the content within the memorandum........ . 12. Confidentiality
We have briefly highlighted that the confidentiality of selling your business is important throughout the whole process. If people find out that your business is for sale, some will have a negative response where some (mainly your competitors) will take advantage effecting your chances of selling........
So far, you have made the decision to sell, found the necessary assistance and prepared the business for sale - the next step is to find potential buyers..........
When people respond to your advert, many of the prospects will be time wasters i.e. those people that are not entirely serious about buying a business........
Once you have qualified buyers, it is important that you get them to sign a confidentiality statement to say that they will not distribute any information they receive or learn about your business.......
Now that you have potential, qualified buyers wanting to buy your business, it is time to start the negotiation. The negotiation period is often a timely process and involves more than just formal meetings between you and the potential buyers.......
After the due-diligence period, the potential buyer will have concluded their findings, with the advice of their business broker, solicitor and accountant (where used) to make a decision as to whether their original offer is justified..........
In some cases, the answer is a threatening no. It is therefore your responsibility to make sure that you minimize the chances of you being left with nothing through none payment or legal action..........
It may have been easy or you may have been through the biggest battle of negotiation imaginable. Either way, you have both come to an agreement on the selling price of the business along with how the purchase will be funded and other related issues..........
After reading the article, you may have already recognised where sellers can make crucial mistakes. The following will refresh your mind as to where you need to take extreme care to prevent your selling adventure from becoming a disaster.........
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