Retirement and the desire to venture into a new industry are common reasons for selling a business. Organization owners decide how if they want to shut down their business or allow a new owner to take over when considering a business sale. In preparation for the sale, they must get all their ducks in a row and follow strategic steps for placing the business on the market and selling it successfully. Here are the steps for selling your business.
Settle Your Debts
Debt management is vital when planning to sell a business, and the owner must create a plan for settling their debts. Buyers want to review the debt volume and decide if the business is a worthwhile investment. If the owner hasn’t managed their debts properly, the business could face bankruptcy soon after a buyer purchases it. Brokers assess company sales according to the debt volume and how owners manage these debts. Talk to a broker if you are planning to sell your business and learn more about settling debts.
Valuate the Company
An appraisal of the company shows how much the owner could get when selling. These appraisals reflect the total value of the company based on its profits and the value of each asset the company owns. Debt volumes lead to deductions in the price of the business, and the owner must disclose the operational cost for the company as buyers need these details. Appraisals are available for the business as a whole and for each individual asset. Business owners decide if they want to sell the business altogether or as separate pieces.
Acquire Financial Statements for the Business
Financial statements and tax returns for the last three years show the financial status of the business. Buyers need to know if the owner still has any outstanding tax liabilities and if the company is in good standing. Too many debts decrease the value and indicate the owner hasn’t managed the company’s finances appropriately.
There are some debts that are expected by buyers, such as utility costs, supplies, and worker-related expenses, but an organization that is paying more out for debts instead of staying in the black is not a worthwhile venture. Too much debt requires a buyer to settle the debts before they earn anything from the business.
Advertising the Business Sale
Brokers advertise the business sale to potential buyers and investors. They know where investors look for these opportunities and place ads to attract more buyers. Specific details about the company are shared in the advertisements.
Review Offers From Buyers and Investors
Brokers present the seller with all offers from buyers and investors, and they negotiate for the buyers to get a fair and reasonable price for the business. A comparison of these offers determines if the asking price is too much and if the owner needs to adjust their expectations. These companies must present profitability for the new owners, and the asking price should reflect how much the new owners can expect to earn over a projected time.
Business sales give owners a nest egg for retirement or to start new ventures, and brokers come to their aid to complete these transactions according to current laws. Selling your business can offer some excitement, but the process is complex, and a professional should guide you through these processes to avoid critical mistakes. Speak to a broker about selling your business and realizing greater profits.
