If you are a small business owner thinking of selling your company you need to be realistic on how the sale will move forward. You need to put just as much preparation into the sale of your business as you did when you started it. A seller needs to be optimistic about their expectations, but realistic as well.
Sellers should answer the following questions as a way to determine their expectations of the sale of their business:
Why are you selling? Is it for personal reasons or are you looking to retire? Perhaps it is the economy and you want to showcase the fact your business is doing well. Whatever the reason, be sure you know why you are comfortable with your reason so you don’t change your mind when a buyer makes an offer and reality sets in. Knowing why you are selling your business should be a part of your exit plan.
What are your expectations of the sale? Having an idea of the price you are expecting or needing to get for your business and what kind of timeframe you want to sell in is also important. Hottes says sellers need to have a thorough valuation of their business completed so they are putting a realistic price on the business. Current market conditions are outside factors that also need to be taken into consideration. A valuation by an outside party, such as a Certified Business Broker, will provide you with a realistic picture of what you can expect in the way of price.
What does your ideal buyer look like? Think about the qualities you feel the buyer of your company should have and what kind of offer they would be presenting. Is the buyer looking to continue to build on your success? Will the buyer be a good fit for the staff you leave behind? There is also a new kind of buyer out there - some laid off individuals are looking to buy a business as an alternative to traditional employment and some boomers are looking for a business that fits their lifestyle while providing financial support during retirement.
Sellers also need to consider how much they will be willing to negotiate and if they are willing to consider seller financing. With the economy they way it is, if a seller wants to get their business sold, they may need to consider alternatives.
Who is going to help you? Just as you can’t run your business in a vacuum, you can’t sell your business in one either. It takes a lot of preparation to get a business sold, so enlisting help from a team of experts is key. Tap your lawyer and accountant to help prepare financial and tax records. Sellers should also use a Certified Business Broker to connect them with serious buyers and assist in negotiating offers. Having a team in place can help you reach your selling goals.
About The Author: Ron Hottes, with Business Team has a business brokerage team of 42 highly skilled and seasoned professionals with offices in Torrance, Woodland Hills and Newport Beach. Our business brokers have over 100 years of cumulative experience and the expertise to help you buy or sell a business in the Los Angeles County area. Reach him by phone at 310-539-8300.
Watch for more blog posts / articles from me in the future!
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