You have finally decided that the time is right to sell your business. The market is still strong, banks are lending, and you have a compelling reason to sell. Now what? You need to get your business in shape prior to listing it for sale. Here are some pointers that can help get you ready.
- Start putting your team together. Selling a business is complex even in the best of times, and even more when you are doing so confidentially, as you don’t want your employees, customers, etc. knowing for a number of reasons. It is also time consuming – it could take a year or more to get to the closing table. For these and a number of other reasons, it is important that you seek the services of the professionals that will compose your deal team. At a minimum you will need a business broker, an accountant, and an attorney. These team members will help you with a number of things, such as, determining a realistic sales price and the net proceeds of the sale, managing prospective buyers and the overall process, putting a deal together, and taking the lead on negotiating on your behalf.
- Be prepared to discuss your reason for selling. Somewhere early in the process you need to be prepared for the prospective buyer to ask you why you are selling your business. Buyers will want to know what your motivations are for selling, what you plan on doing after you sell, and most importantly to determine if they are getting into a potential problem if they were to buy your business. Consider putting together a list of attributes that will make the business attractive to buyers. You need to be honest, but you also need to key in on the positives.
- Get your financials in order. Prospective buyers will want to see financial statements, tax returns, budgets, accounts receivable aging reports, a copy of your lease, etc. These are just a snap shot of what you will be asked to provide during the due diligence process. You also need to put together a list of the tangible and intangible assets that will transfer as part of the sale. If you don’t have accurate financial records, you need to get this taken care of with your accountant prior to listing your business for sale.
- Don’t ignore the appearance of your business. Make sure that the fixed assets and the facility interior and exterior are in good shape prior to listing your business for sale.
- Fix, replace, or get rid of broken equipment
- If you haven’t taken a physical inventory, you need to do so prior to listing. Get rid of excess and/or dead inventory.
- If the facility is looking dated and worn, consider painting, replacing floors, refreshing the outdoor appearance, etc.
- Start gathering and putting together information. Your team will need a great deal of information in order to package your business in preparation for presenting it to prospective buyers. In addition to the financials and the lease, they are going to need a great deal of information from all facets of your business. Although this may be painful, it will be well worth the effort in that it will help your team put together a detailed presentation. More importantly, much of this information will also be what a prospective buyer will be asking for during their due diligence.
Getting your business ready to sell takes a great deal of time, especially if you don’t have your books and records in order. It isn’t unusual for sellers to take several months or more to fully prepare their business for sale. If you aren’t as ready as you would like to be, don’t let this get you down and keep you from getting started. This way of thinking is very neatly personified in a circa 1562 adage of John Trusler, a compiler of proverbs, who is noted to have stated “no time like the present, a thousand unforeseen circumstances may interrupt you at a future time”.
About Us: VR Business Brokers is one of the world’s largest and most experienced brokerage firms specializing in helping people with the sale and purchase of businesses. We go the extra mile every day to assist all parties during the complex business sales process. We know that each and every business is unique, and that’s why we go through a meticulous process to find and unlock the true value of each business. More information is available at www.BusinessBrokersofTampaBay.com.Read More