Sell a Business
Thinking that it is time to sell your business?
The decision to sell one’s business is a significant one, and in most cases is the most important financial decision of a business owner’s life. To avoid the potential pitfalls that might occur, it is important to implement the following when positioning your company for sale:
- Continue to operate the company as normal or it will start to decline.
- Be able to give specific, logical reasons for selling.
- Be willing to note the pros and cons of owning a business, as a balanced appraisal will enhance your credibility with a potential buyer.
- Clean up the premises.
- Clean up the books – go after past due receivables, clear up leans to officers, sell off old inventory, trim payroll if needed, etc.
- Purchase minority interests – they can cause complications that can break a deal.
- Make a list of all tangible assets and/or equipment and consider having them appraised. Determine which are to be sold and which will be retained (if any).
- Examine leases and contracts for transferability. Also, investigate all areas of possible successor liabilities – these can be deal breakers.
- Have on hand three years of properly prepared financial statements and the corresponding state and federal tax returns. Have your accountant prepare a statement that shows the company’s adjusted pre-tax earnings for the past three years.
- When selling a business, understand that what you think your company may be worth and what the market is willing to pay for it may be two different things. Terms can be a significant factor in the structure of the sale of a business.
- Engage a business broker to evaluate, package, and market your company.
Selling a company that may have taken a lifetime to build is too important a task to leave to chance. To ensure that your goals and objectives are met, it is important to proceed in an organized and systematic manner. Remember, the issues can be complex, so select the best professional advisors available and make sure that you are mentally prepared to take this step. The process of selling a business involves compromise and a lot of patience – both of which you earned as you built the business up in the first place.