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Sell when the business is doing well, not when it is
declining or needs help.
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Try to improve the financials - keep everything
clean and detailed. If you have been loading
the business with personal expenses and removing
"cash" from the business this is the time to correct
it if you want top value for your business.
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Make sure the business is presentable - clean, neat,
orderly, and all maintenance is up to date. A well
cared for business will get a premium.
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You can sometimes double the value you will
receive for your business with a proper exit
strategy
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Come to grips with the idea of completely
"cashing out" on a sale is a rare occurrence.
It happens, but don't count on it. A portion of the sales price of
virtually all businesses is financed. There is a
simple reason for this. Buyers want to invest the money
they have wisely. If they can leverage their cash and
finance a portion of the sales price, the buyer will be
able to acquire a bigger business with more cash flow.
So, Sellers should understand that buyers want to
optimize their investment and financing permits that to
happen.
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Continue to run your business in a normal
manner.
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Work
with your intermediary to offer the business at a realistic
price and with reasonable terms. You need to
provide as much information as possible so a professional marketing package,
including a business profile, can be prepared on
your company. The quality of the business profile
will greatly enhance the “saleability” of a
business. A package prepared by Veracity will
contain the financial, operational and historical
information about the business. Informed buyers
make better offers.
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Liquidate or set aside obsolete inventory and
unneeded equipment before you place the business
on the market.
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If you plan to sell
your business...do not be an C-Corp. You will
regret it at tax time.
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Meet
with your accountant and/or attorney to understand
your tax ramifications of the sale.
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Understand that unless you are selling a huge
corporation, most small business transactions will
be asset based sales. Buyers do not want to
incur the outstanding liabilities of your company.
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Notify your
intermediary of any material changes in
your business.
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Forward monthly financial statements as soon as they are completed. This will keep your marketing package current.
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Do not meet with potential buyers without your
broker being present and avoid direct negotiations.
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All offers and counter-offers should be in
writing and should be presented by the
intermediary.
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Put
yourself in the buyers shoes. Look at the
information you are providing and how the business
is presented. Would it make you want to buy?
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Buyers will often want to change the business.
Do not take it personally as a rejection of your
style of running things. As a new owner they
want to structure things in a way that works for
them. Making those decisions is why people
become business owners.
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Take
this to heart..."NO deal is done until the cash is
in the bank" Many deals that look like they
are done sometimes fall apart at the closing table.
