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Five tips for selling a business

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December 28, 2022

We are often asked for more insight into the process of selling a business.

So, we thought, why not take a deeper look into the process and potential steps you could take along the way to achieve a successful sale.

Organize your financial records
If you have an eye toward selling a business, typically the best starting move is organizing your finances.

The first thing prospective buyers will ask for in the due diligence process is your company’s full financial records.

You’ll be expected to provide everything from balance sheets and cash flow statements to tax returns and records of IP holdings.

If you’re considering putting your business on the market in the near future, it’s a good idea to begin organizing these records as soon as possible.

Get a business valuation
You’ll want to have a professional assessment of your company’s worth through a valuation.

During this process, a variety of factors will be considered.

The end result will be that you receive a recommendation for an asking price.

Keep in mind you’ll want to establish a reasonable asking price based on the current market.

That’s why it’s so important to have an objective third party involved.

You will want to ensure the professionals performing your valuation have expertise in this area.

Find experts to assist you
It’s essential to have experienced professionals by your side during the process.

It might be a good idea to choose a business broker or mergers and acquisitions (M&A) advisor with years of experience under his or her belt.

Your brokerage professional will advise you throughout the process and help eliminate roadblocks and headaches along the way.

You will also want to employ the services of an accountant and attorney – who have direct experience with buying and selling businesses.

Talk to colleagues
If you have friends and colleagues who have sold their businesses, you can learn a great deal by asking them questions.

They can tell you about what they learned and perhaps even share stories of what they would have done differently along the way.

In regard to the previous step – “Find experts to assist you” – your peers may have strong recommendations for professionals who can assist you during the process.

Be transparent and open
When you put your business on the market, you will subject yourself and your business to a degree of scrutiny.

Be prepared to be honest and transparent along the way.

If you don’t reveal all the information buyers will need and want to make the best decision on their end, it can create red flags and disrupt the sale.

If you fail to disclose information, it may come back to haunt you.

Also, keep in mind that often your original plans for the sale of your business may not always match the best final outcomes.

For example, in some cases, a company that planned for a total sale may find the better outcome is to merge with a larger competitor.

In some cases, sellers decide to offer seller financing to make a sale happen.

The most successful buyers keep an open mind and consider all possibilities.
Bob Wolter is mergers & acquisitions advisor of Creative Business Services/CBS-Global.

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