800-905-1213 Ext 111

Tips To Sell Your Business

 

What will a buyer look for in your business?
Expect a diligent buyer to subject your business to a thorough examination. This may include scrutiny of:

• Your marketing and operations
• Management structure
• Customer and market base
• Financial statements, tax returns, payroll records, etc.
• Earnings (profit before taxes) for the past three to five years.
• Assets of your business and -- facilities, equipment/vehicles, inventories and lease-hold improvements.
• Your legal status -- pending or potential litigation and lease agreements.
• Employment contracts
• Corporate minutes, and your patents, licenses, permits and franchise agreements.

What steps will you go through in the selling process?
The time required to sell a business, from the decision phase until the completion of the transaction, may be months. The first step is to prepare all significant documents referenced above. Don't worry if you don' have all of the documents. Bizprofitpro can help you get or create necessary documents if they are not available.

Next, Bizprofitpro will introduce a pre-screened prospective buyer. Price and terms should not be discussed here. Third, start the negotiations and deal structuring. At this time you can discuss price and terms. Fourth, after all material issues have been resolved and an agreement has been reached on price and terms, get a letter of intent and an earnest money check. The purchase agreement and closing aspects of the sale should be reviewed by your attorney and CPA.

Enhancing the value of your business

The value of just about any business can be enhanced through some fairly easy steps, some of which are outlined below. By making these adjustments to prepare your company for sale, you will make the process go more quickly and smoothly. Here are some steps that you can take now to maximize the value of your company and assure a quick and successful sale:

Financial Issues

Financial's prepared for tax purposes are designed to show income as low as is possible within the confines of tax law. Talk to your accountant about possible modifications in your accounting methods that may work to your advantage when it comes to selling your company.

Employee Issues

Buyers are afraid that key employees might leave after they take over the company. Talk with key employees. If they are prepared to remain with the company through the transition, fine. If they are thinking of leaving, it is better that they leave sooner than later. This will allow ample time to train a replacement who will remain with the company through a transition.

Examine Retirement, Profit Sharing, and Pension Plans

It might be advantageous to change the characteristic or terminate the plan well before selling the company. Similarly, if you are the trustee and or administrator of a pension or profit sharing plan, now is the time to consider turning these functions over to an outside administrator. Consult your lawyer, or retirement plan advisor.

Contractual Issues

Take a close look at any contracts you have with suppliers or customers. Those that would be beneficial to a new owner should be kept and standard if possible. However, if there are contracts that you are renewing because of habit, or for other reasons that are not financially prudent, now is the time to do something about them. Contracts that are harmful to a buyer will certainly lower the value of your company.

Review your Real Estate Lease(s)

If location is important to your business, make sure that a buyer will be able to stay in that location for a reasonable period of time. Above all, make sure that your lease is not set to expire and be re-negotiated while you are actively selling the company. Pay specific attention to renewal options. Renewal options are generally better than long commitments because they give the buyer maximum flexibility to stay put or to move. If possible, get a lease that can be assigned to a buyer at your option.

Examine Equipment Leases

If you are leasing equipment and the lease will remain in place after the sale, look at the rationale of the lease(s) from the perceptive of the buyer. If a lease will have the effect of saddling the buyer with an interest rate well above prevailing rates and any tax advantages have already accrued to you, the lease may hurt the value of your firm. Your accountant can advise you here.

Formalize Your Records
Suppose your policy is to give customers terms of net 30 days. Like most business owners you probably make exceptions to your policies. Make sure that you apply your policies and document any exceptions carefully - you do not want to surprise the new owner!

Systemize Operations

Many small companies rely on a mix of clearly documented procedures and undocumented practices.  Your company will be more attractive if procedures are clearly systematized and documented so that a competent manager can take over with minimal training. You need procedure manuals. Make sure the procedures are tested and refined before the sale.

Review Terms and Structure of Sale

The terms are as important as the price. Decide the range of owner financing that you will consider and the degree of security you will demand. Remain flexible though, so as to not limit your options. A buyer may present you with a reasonable but unexpected financing package. There are as many ways to structure financing as there are businesses for sale. You can sell all of the business or part of the business. You might sell your interest in a corporation to another corporation or an individual. Or, your corporation may sell its assets. It is not unusual for a business owner to sell the business but retain ownership of the receivables for purposes of security. There are even instances where a business is essentially leased with an option to purchase. The appropriate structure can help you get what you want from the deal, it can protect you legally and financially, and it can bring a deal to fruition that would otherwise never happen. And remember, Bizprofitpro can help with every element of the sales process.

Many treat the sale of a business as a transaction. We don't. A business represents the highest level of professional commitment and maybe some blood sweat and tears. Your business represents your life's work to some degree and that work should be fully reflected in the marketing and sale of your business. You started your business so your financial condition would be enhanced or secured for years to come. It is vital that you begin preparing your business for sale now, even if your plans don't include an immediate sale. The earlier you start the process the more financial reward you will gain.

If you would like more tips on getting the most money out of your business. Download our free White Paper: Increasing The Value of Your Business Six Times in 12 Months. Business owners can benefit a great deal by making subtle changes in their business to affect massive increases in business valuation. Businesses should be managed with valuation in mind. This isn't just good for selling your business, but good for the smooth running of your enterprise.

 

 

Increase The Value The Business of Your Business Six Times in 12 Months

Instant Download by Email

 

Enter Email Below For Instant Download

Name :
Email :