If you are considering selling your business, you should strategically plan and prepare. Although numerous factors influence the success of a business sale, grasping and following through on these five smooth stones will give you a good shot at hitting your financial target.
1. Make your business compelling
Appeal to prospective buyers with long-term contracts and other ongoing reliable sources of revenue. Ideally, your businesses should provide unique specialties that customers count on and can't find elsewhere. Your products or services should be branded and your business brand worth something to potential buyers.
2. Gear up for the buyer's due diligence
Put yourself in the position of a potential buyer and look into every corner of your business. If you were buying your business, what might worry you? The effort you spend upfront to avoid due diligence surprises will save you disappointment later.
3. Keep running your business
Instead, work extra hard so customers maintain their patronage. Make sure your employees stay engaged, motivated, and excited about the future of the business. Get your operations flowing better than ever and your premises in prime shape.
4. Negotiate effectively
Do you know what the consequences are should the buyer walk away? You can be more flexible if you have three other buyers ready to march in, or if you have time to wait for another buyer to come along. If you must sell quickly for personal reasons or because your niche market business has few likely buyers, you will have to be more flexible. This places you in a weaker negotiating position. Your pre-sale preparation should focus on gaining negotiating power. Prepare as soon as possible so time stays on your side.
You also will need to win the trust of your buyer and keep it throughout the process. Present the value of your business and projected earnings credibly, supported with historical data.
A business broker who is an experienced negotiator will be able to help you define a strong negotiating strategy. Your broker manages the concerns a buyer will raise and will negotiate to get you the best possible deal.
5. Attend to the terms
A deal should also be structured to give you tax advantages. Be sure to talk with your CPA about structuring the sale for terms that limit your tax liabilities.
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