When to Sell Your Business
If you have decided to sell your business, brace yourself because this would take a long process. It could take up to a year or so before the whole process is completed. Take this as an opportunity to plan your exit strategy.
There are some things that you need to do before selling your business. There are steps to ensure that your business is all set.
- Have your business valuated. The first essential thing that you need to do is get a realistic idea on how much your business is worth. Be sure to take it from outside source. Get it from someone who is professional. It will serve as a best from what buyers would offer. You would also know what to expect from the sale. This would also give you an idea about the position of your business in the market. You could also know your financial situation, strengths and weakness. Business valuation should be taken from a number of sources. You could get it from accounting firms, business brokers and banking firms. Take note that the company that you hire to do the job will have an access to data and private transaction. Make sure to select a firm that has experience in your business industry.
- Setting your accounting books in order. There are buyers who evaluate your business on the basis of your books. Some of them would require three years of financial date. Be sure that your financial statements are well reviewed and prepared. This would give you a good impression. It would be easier for buyer to have due diligence. Sometimes tax returns can suffice.
- It is better to know the true profits of your business. There are privately held business that has a different non operational expense. Make sure that you have supporting documents for this expense. There are businesses that might be paying for your car lease. There are also some expenses that incurred for the past three years and you should include it in your cash flow. Examples of this might be moving expense and some legal expense.
- It is best if you can consult your financial advisor. It is best to speak to your financial advisor. This includes planning your financial future. Understand your tax structure to help you deal with it.
- Make sure that you make a good impression to the buyers. Potential buyers look for companies that perform well. Buyers would want to see orderly team and smooth back end process.
- Ready all your paperwork. Review incorporation papers, permits, vendors, leases and other contracts. Make sure that they are available and current.
- It would be best to plan management succession. If you are holding a position in your company, hire a replacement or put a plan in place.
- A seller should know reasons for selling. Practice articulating your reason.
- Strongly consider hiring attorneys and accountant that can represent you in the whole selling process.
- When you are selling your business, don’t neglect its performance. Don’t become too focus with the sale.
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