Selling Your Business
Here are five thoughts to keep in mind when you are considering the sale of your business:
- Determine your readiness to sell. Selling your business is a personal decision and it requires a commitment of time and energy. You will be required to disclose substantial proprietary financial and operational information about your business. Take some time to speak with your family and trusted advisors to determine your readiness.
- Prepare your business for sale. You will need to prepare your business operationally, physically and financially for careful scrutiny. This includes reducing unneeded inventory, cleaning up your physical locations and preparing at least three years’ worth of tax returns and financial statements. If you are selling your business for more than $1 million, your financial statements should be audited, or at the very least, reviewed.
- Get your team in order. You will need professionals who are well schooled in the sale of a business to ensure a smooth transition. You may have some trusted attorneys, accountants and financial advisors that you have worked with for years, but they may become a liability when it comes to selling your business. Professionals that are not experienced with the sale of businesses can throw up unnecessary roadblocks and make it more difficult to sell your business to good buyers, as well as make it harder to protect your money after the sale. Take an honest look at your advisors and decide if they are up to the task.
- Think about the terms of the sale. When selling your business, it is often necessary to provide some owner financing. You need to determine what level of financing you are willing to consider. You need to think about what to do with your receivables, if applicable. You should also consider how long you would stay on to provide a smooth transition.
- Work out potential problems in advance. If you are leasing your business property, let your landlord know that you may be selling and work out potential transfer issues in advance. Find out how to transfer key licenses and permits. When possible, speak to key employees and vendors to ensure the smooth transition of your business to the buyer. There are many hurdles in selling a business as it is, so try to address potential issues before they unnecessarily delay the sale.