Tips on How to Sell Your Business

Tips on How to Sell Your Business
Selling your company is a big decision.? Here?s how to manage the process and get to a successful sale.

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It?s almost the fourth quarter, that time when business owners take stock of the past year and start planning for the next one. That means re-evaluating your ultimate goals, for yourself and for your company, which makes it a good time to consider when you might want to sell the business.

For most owners, who haven?t sold a company before, the sales process is fraught with uncertainty ? the more so because your business represents years of your life and personal effort. When you?ve decided to go ahead and sell, here are ten suggestions for how to close the deal successfully and profitably.

Appoint a Team Captain. There are often multiple owners and decision makers at a company. Empower one trusted individual to be the key spokesperson and decision maker for all negotiations. Centralized decision-making instills confidence in potential buyers and helps expedite the sale.

Assemble a Sales Team. Selling is a specialized process that requires the help of experts such as lawyers, accountants and intermediaries to help with negotiations and protect the business interests of all parties. Pick seasoned professionals who can give open and candid feedback during all phases of negotiations.

Know the Company?s Value. Size up the competition by maintaining internal due diligence on company rivals and monitoring for news on similar transactions within the industry. With the help of knowledgeable professionals, the comparable data can be analyzed, and a range for the company?s fair market value can be determined.

Price Fairly. Data from recent sales of competing businesses factoring in current market conditions will help you and your sales advisory team to determine a realistic valuation. Typically, purchase values range 10 percent above or below comparable sales figures. Be objective about your company?s unique selling points and be reasonable when factoring them into your price expectations. Quality buyers steer clear of companies that are clearly over-valued or under-valued.

Prepare for Due Diligence. Buyers will want to conduct a thorough business review. Plan well in advance, and assemble all important documents such as lease agreements, property appraisals, equipment lists, corporate minutes, stock certificates, sales representative agreements, bank documents, customer/vendor/employee contracts and other forms of due diligence. Anticipate and allocate time for negotiation meetings, plant tours and company visits.

Develop a Summary Sales Proposal. Known as an Offering Memorandum, this document declares that the owner is serious about his intent to sell. By stating expectations regarding basic price information and other points of interest, the seller helps the potential buyer determine the likelihood of completing the deal.

Maintain the Business. Just because the company is for sale doesn?t mean that work should slacken. Work hard to keep the business thriving during the sales process, because sales price and negotiation power erode if company profits slip. Take care to clean up and audit the company financials. Continue performing all routine maintenance and keep the business facilities clean and organized.

Retain Company Leadership. Resist the urge to trim staff to bolster profits. A thinly staffed company with a multi-tasking CEO that also functions as CFO and head of sales is likely to bring a lower sales price than a company that is fully-staffed. If necessary, negotiate stay agreements with key staff, as most buyers prefer to have a competent management team in place at the time of sale.

Stay Committed.?Selling a business is not a simple process. While most businesses sell within six to twelve months, expect the process to take longer than anticipated, and be prepared to address numerous critical issues as the sale progresses. During the negotiation phase, be willing to give as well as take, and keep options open until key goals are met. The best approach for a successful sale is for each side to feel that the transaction was a win-win for both parties.

Let Experts Negotiate a Prompt Close. Once an agreement is reached, exert every effort to complete the transaction without delay. Deals that stall typically never get completed. Listen to the advice of negotiation experts, and rely upon their skills to close the deal. However, recognize that the final decision to sell rests with the owner.

Often, selling a company can be an emotional and dramatic experience, particularly for an owner that has spent many years developing and growing a business. By allowing sufficient time to prepare for and negotiate the sale, owners are in a best position to get a premium price for their business.

Source: http://www.allcapcorp.com/2012/09/19/allegiance-capital-insight/tips-sell-business-003130.html

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