How to Sell a Business
Author: Anne Brown
What’s
the Process? If you are looking for information on how to sell a business, here is a quick summary of the steps that are usually required. Selling a business is a much more involved process than selling real estate. It takes a specific set of skills to properly sell a business to get a fair value. Listing your Business for Sale with a Business Broker
Meet with a reputable business broker in your area. Talk to them about the sales process and what they will do to help you sell your business. Listing your business with a broker is a good decision if you want to sell your business confidentially and want to use the resources of a professional intermediary to guide you throughout the process. Determine a Selling Price
One of the first things that arises when people ask how to sell a
business is the asking price. This is something that a business broker
can help you with for most businesses. For larger or more complicated
businesses you can use the services of a professional business valuator
to determine the selling price. You also need to think about what
you are selling – for instance, are you selling the business assets or shares (there are tax implications – most
small businesses are structured as asset sales though). You also
need to think about work in progress at the time of the sale and
how that will be transitioned and at what price, inventory, accounts
receivable, etc. These are issues you can talk to a business broker
about as well as your accountant. Determining a selling price and
what exactly is for sale is an important step in how to sell a business. Marketing and Advertising
A business broker will plan how your business will be marketed and advertised with the end goal of achieving multiple interested potential buyers while maintaining the confidentiality of the business sale. Business Information Profile
Business buyers will need a brief ‘snapshot’ of what your business is about – a small ‘teaser’ if
you will, to help them decide if they want to learn more. A business
broker with the knowledge of how to sell a business will put
together this quick (and very effective) brief snapshot of your
business. It is a short description with one or two lines of
general financial performance. Rest assured, the business identity
is not disclosed yet at this point. Upon
showing interest in the business, a potential buyer would
then have a conversation with the business broker about themselves,
their objectives and what they are looking for. The broker
will ‘qualify’ and screen a potential buyer at this point. If deemed to be appropriate, a business broker will invite the potential buyer to sign a non-disclosure agreement and then would present the potential buyer with a fuller information package on the business that would include a information on the operations of the business, number of employees, a brief summary of the financial performance and any other pertinent “general” information
about the business. This general information is under strict
non-disclosure rules to help ensure confidentiality of the
sale. After reviewing this information, a potential buyer
may decide if they want to take their interest to the next
level. This is a major way a business broker can assist you
in how to sell a business. Showing the Business to an Interested Buyer
Presenting a business to a potential buyer is a major step
in how to sell a business. It’s important to present an accurate picture of the business – blemishes and all. Buyers can be jaded after a while and realize that every business may have their speed bumps so it’s important to be forthright and not sweep anything under the rug, so to speak. This is, however, the time to ‘show off’ your business’s accomplishments and showcase the hard work you have done to make it a success – this is the time to put your best foot forward and, effectively how to sell a business by being honest – which can be refreshing to some buyers. There will be a lot of questions at this point from the buyer – try to answer everything you can, within reason though. It’s
important to remember that there is a point where a buyer
needs to make a conditional offer and satisfy themselves
through the due diligence process. Getting an Offer and Accepting an Offer
The majority of business offers are conditional offers.
They are can be conditional on many different issues: confirming
some facts during the due diligence process, getting financing,
assuming leases successfully, obtaining franchise approval,
etc. A condition offer is usually made with a refundable
deposit (if the deal does not go through) and is usually
seen as being without risk for the buyer until they waive
conditions and go ‘firm’. Due Diligence
During the conditional offer phase, a business buyer
will conduct their due diligence – which is a critical
step in how to sell a business. Here, the potential
buyer will confirm facts, go through financials and
review the overall business operation very carefully.
If there ever was a time for a buyer to be extra meticulous,
this would be it. The role of the broker would be to
help in facilitating the process and be a go-between
for the buyer and the seller.
If the buyer satisfies themselves that everything ‘checks out’ during the due diligence process and waives the other conditions all that is left is to close the transaction – which
involves signing documents through respective lawyers
and exchanging money.
About the Author:
Ontario Business Brokers
Business for Sale in Toronto, Hamilton and surrounding areas in southern Ontario, Canada. We are a full service business brokerage here to help you buy or sell a business. Article Source: ArticlesBase.com - How to Sell a Business
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