So You Want To Sell Your Business

We have recently had an influx of clients coming to us and stating they are thinking about selling their business and need help figuring out at what price it should be sold.  For many small business owners, selling a business represents the culmination of their entrepreneurial career. Most owners have worked very hard to build the business and make it what it is today but are thinking it may be time to slow down and enjoy the fruits of their labor.

However, many business owners are surprised at the stress involved in selling their business. We suggest that the best way to minimize the stress is to prepare and begin to work through it step by step.

  1. Assess your reasons for selling. This is also the time to ask yourself what you hope to achieve in the sale, i.e. what is the amount you want to receive for your company.
  2. Seek out advice and help to develop your strategy from your trusted advisor. Consult with a team of professionals.  Advent can handle the valuation.  A commercial realtor or business broker can be a real help in terms of finding and dealing with prospective buyers or your company and helping you navigate the sales process.  An attorney is also necessary to draw up and review documents necessary to sell the company.
  3. Determine what your business is actually worth.  Here is where Advent can help.  Determining your business’ value can be a complex process. You will want to identify a fair and objective price for your company that will attract buyers and doing so will require the application of one or more generally accepted methods of business valuation. Understanding not only the what of a reasonable value but the way of a reasonable value often helps owners to put aside the emotional connection to the business that can lead to an inflated value for the company.  Having a valuation performed may also reveal operational deficiencies that can reduce the value of the business or make the business difficult to attract offers.
  4. Get your business ready for sale (put the house in order).  When you sell a house, there are usually things that need to be done to prepare it for sale and make it presentable to potential buyers. The same is true when you sell your business. Here is the chance to implement any of the operating deficiencies identified during the valuation.  Potential buyers will want to examine assets such as buildings and equipment firsthand; but they’ll be even more interested in your business’ financial statements so you need to keep your business records up to date.  With the help from Advent, you can also prepare a packet of financial information that reflects the financial condition of your business, presented in such a way that supports the asking price.
  5. Screen potential buyers.  Not everyone who expresses interest in your business will be a serious buyer. Some people shop for businesses like women window shop for shoes. The problem is that showing your business to potential buyers takes time. Rather than waste time with insincere prospects, it is much better to screen buyers in advance and only meet with those who are truly serious.  Business owners shouldn’t provide any information about the business until they have determined the potential buyer is capable of completing the transaction. It is not unheard of for competitors to disguise themselves as buyers in order to gain information about the competition.
  6. Finalize the sale.  Once a deal has been negotiated it is up to the attorneys and lenders to finalize the sale. All you have left to do is sign a few papers and ride off into the sunset.

Selling your company is serious business, so you want to make sure you take the time and trouble to do it right. Careful preparation and using the professionals, such as Advent, are the keys to the success.  Call us.