If you are a business owner considering your options, you may be in the stage of determining how to sell a business. Being one of the areas leading firms in the industry, we are well equipped to help you with your questions. Your business information will be handled by experts and conducted in a confidential manner. Below is an outline of some of the issues you should expect when selling your business.
The Many Aspects of Preparing to Sell
Even if you think you’re many years away from selling out, you should consider what your heirs or successors would have to do if you died unexpectedly. If you don’t have a workable exit strategy in place, you (or your heirs) may have no choice but to liquidate the business and sell off the assets piecemeal, getting nothing for the goodwill you’ve built up over the course of the years.
Initial issues in selling out – how should you time your decision and choose experts to help, and what legal/ethical pitfalls do you need to avoid?
Valuations of small businesses – how does the market put a price on a small business, and what can you do to maximize your own business’s value?
Finding a buyer – what do you need to know about working with a business broker, creating a selling memorandum, and other marketing concerns? If you work with us, we already have pre-qualified buyers, and one of the first steps in selling your business is to see if we have potential buyer matches in our database.
Tips during the listing process:
•Have up to date financial information available
•Prepare a current list of fixtures, equipment and inventory (if any)
•Maintain normal business hours
•Dress up the business premises
•Be prepared to negotiate
•Gather all of the information a buyer might like to review (see below)
Structuring the deal – what are your options as to terms, paying particular attention to the tax implications of various alternatives? For a brief recap, the following will need be reviewed by potential buyers:
•Financial information (including tax and liabilities)
•Premises and assets (condition, value, etc)
•Intellectual property (trademarks, copyrights, etc)
•Employees (roles, key members, etc)
•Management (effectiveness, etc)
•Products and services
•Customers (relations, reliability, etc)
•Suppliers (relations, cost, etc)
•Licenses and contracts (staff, leases, customers, etc)
•Sales and Marketing (methods, costs, success, etc)
•The industry itself (history, present and the future)
Financing the deal – what should you know about seller financing, and third-party financing through leveraged buyouts?
Completing the deal – from the Letter of Intent through due diligence to the closing, what are the typical steps you can expect to go through in the sales process? When you sell the business, there are expenses in the selling process and you will not receive the exact amount that you sold it for. Below is a summary of what you can expect to receive (cash) from the sale. This is for guidance only as it will be different for everybody depending on what approach was employed to sell your business.
Cost of Solicitor
Cost of Accountant
Cost of Business Broker (can be high as 10% of the final sale price)
Any accounts payable
Payment of any outstanding loans, leases, contracts, etc
Cost of bringing the business up to speed (repairs, refurbishments, etc)
Prepaid rents, insurance, etc
(Equals) SELLERS EXPECTED PROCEEDS
After the sale – have a plan in place for what you plan to do with your life!
Let an Exodus Business Solutions professional help you with the sale of your business. Click here to learn more.