When it comes time to sell your business, there’s a lot more that goes into the equation than simply pricing it high and hoping to work with the top bidder. Selling a business involves selecting your team, working with the right buyer, establishing a value based on market conditions and considering the financial impact resulting from the transaction. Understanding your business’ value (and how to increase it) is the critical first step.
Here are the top 5 things you need to know before you sell your business:
- Value Realization: You need to identify and realize the value of your business as it stands, which means it’s time to consider the overall business, sales, finance, operations, product development and introduction, business transformation and strategic execution, and your exit strategy. Knowing what a buyer will look at to determine value is a must. Once you’re clear on current value, decisions can be made about the adjustments that need to occur to realize your company’s true value.
- Retirement: After assessing the value of your business, you need to think about the aftermath of the transaction and where that leaves you, the business owner. How much you need in retirement may be more than what your business is worth, but it at least gives you an idea of what number you want to work towards before it’s time to sell your business.
- Buyer Personas: You’re going to encounter different kinds of business buyers out in the open market. There will be Strategic buyers who want to add a missing component to their company, looking at your business as the key. There may also be a high-net worth family that wants to add a business to their personal portfolio, or set it aside for their kids. Know who you’re working with.
- Gather Details: There’s going to be a lot of questions fielded about your business. You want to be prepared heading into negotiations, rather than be caught off-guard by questions and requests that you haven’t yet evaluated yourself. Take the time to sit down, go over tax returns, review past documents and entries, and try and gather information on anything that could come up in conversation.
- Remain Neutral: When it comes to your business, emotions can run high. Remaining neutral and removing emotions isn’t exactly easy, but it’s something you want to consider. Strong emotions can lead to irrational decisions, causing you to price the business too low or too high after finding fault with an interested buyer. Remember that a business is not a person, it is an entity with many different components.
ClearPath Business Advisors
At ClearPath Business Advisors, we understand how complex and overwhelming a business sale can be, that’s why we work side-by-side with you to prepare your business for the best sale possible. Through our ClearPath Value Realization Program and other services, we help you maximize the value of your business. Don’t attempt to do it alone.