How to Sell your Business
Selling a business takes time, energy and know-how. Thousands of businesses change hands every year with varying levels of success. To get the sale you want and your best result, it pays to understand the business sales process well. The four main steps to maximising your returns when selling a business are; planning, marketing, negotiation and the business sale.
PLANNING
Planning is critical in the
business sales process, it’s about knowing who your
likely buyer may be, what they will be looking for in a
business, and how to best present and pitch your business
for sale. Business buyers are primarily looking for
cashflow, good systems, and a business with a future;
so it’s important to prepare your business for sale by
reducing unnecessary expenses and increasing sales to
improve cashflow. Formalise all your business systems and
processes so that the business is less reliant on you,
allowing the easy transfer of the know-how and goodwill
with the sale.
Along with getting your business looking attractive, it pays to assemble a team of professionals to help. Your Accountant to prepare the financials, offer advice, and possibly help in valuing your business. A Lawyer to help with the contractual side, and if you have limited skills in the area of business sales you can to use a Business Broker to appraise, value and market your business.
MARKETING
Finding the right buyer can
take time. Market your business to target your best
prospects; after all you want to attract as many
potential buyers as possible. Make use of networks and
popular business for sale websites, with possibly some
print and database marketing. Any interested parties will
need to be screened to determine if they have
the sufficient funds, skills and commitment to buy and run
the business. Only qualifying buyers should get to sign
a confidentiality agreement and gain access to more
detailed information about the
business.
NEGOTIATION
Once you have an interested and
qualified buyer with an offer, you can begin negotiating.
Determine what’s important to you and work with your team
to set any conditions for the sale. Only accept offers made
in writing on a standard “Sale and Purchase Agreement”
and use this as the basis for your negotiations. The
agreement sets out the price, and the terms and conditions
of the offer, and will usually be dependent on the
purchaser completing due diligence to their satisfaction.
Work with your team and the buyer to satisfy any concerns
so you get the best deal and a satisfactory offer.
THE
SALE
Once both parties have signed the contract there are
usually conditions that need to be satisfied. The process
of due diligence is where the purchaser along with their
accountant and lawyer examine the business in more detail,
to verify all the information provided. This process
normally takes between 10 and 20 working days to complete,
depending on the availability of information and complexity
of the business. Work with the buyer to help satisfy
the conditions of the offer. Once satisfied the contract
is declared unconditional by the purchaser’s lawyer, and
the business is sold.
By understanding the business sales process you will be better prepared to maximise your price and make the sale you want when it comes to selling your business. To better prepare your business for sale go to: www.sellabiz.co.nz and request a free "Business Sellers Checklist".
Ends.
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