Plan Well to Maximize Business Sale
When a business owner makes the decision to sell, no matter what the reasoning, the goal of selling is to maximize the proceeds that the owner will receive from the sale. Because this will be one of the most important transactions that a business owner will ever take part in, they should approach it with careful and concise planning. We believe that owners should devote as much time and energy to the effort to sell as they dedicated to building the business. Once that decision is made, here are some pointers that will help the transaction succeed.
Standing by the Process. It is not uncommon to change your mind about selling your business, but you should stand by your decision to sell once you make it. This is especially the case with family businesses, where it is important that every member that has a stake in the business is on boards with selling to a qualified buyer. If there are stockholders, private equity groups or other partners that have a stake in the business, they need to be involved in the process. Deciding the Point Person for the Sale. If there is more than one person that has ownership with you in the business, it should be agreed upon who will be the point person for negotiating the sale. Too many people involved will lead to confusion and cause the business sale to falter.
Communicate with Your Landlord and Banker. If your business is currently under a lease, you should speak to your landlord about your plans. They may not agree to terminate your current lease agreement, let alone change it to another person they haven’t met. There are plenty of accounts from sellers who were in the final stage of signing the deal with the buyer, and the sale was killed because no one consulted with the landlord. They no bankers like surprises, and will be cooperative if you haven’t kept them abreast of what’s happening.
Readying for Buyer Due Diligence. Prior to marketing your business and searching for prospective buyers, you will want to put together all the information regarding your company – financials, vending contracts, distribution and purchase agreements, leases, licenses, intellectual property, etc. When you do find a qualified buyer for your business, they are going to want to perform due diligence, examining every aspect of your business; therefore, be ready.
Letter of Inent or Asset Purchase Contract. If you know that the buyer will be submitting a letter of intent or asset purchase contract, you will need to be prepared to address the items you will want to include, such as; price and terms, contracts and warranties, lease or purchase price of real estate, employee contracts, due diligence schedule, and the closing date.
Now that you have finally decided to sell your business, don’t get caught short due to a lack of planning preparation. The more thought, effort, and commitment you demonstrate throughout the process will equate to a higher selling price in the end.
