It is not an easy undertaking to sell a company because it requires a lot of work and effort. The fundamentals are similar, and there are established protocols you may follow to get the best offer, even though every business sale is unique. If you are more prepared, your chances of maximizing revenues rise.
It’s wise to start getting ready to sell your company a year or two in advance of the actual deal. You’ll be able to plan everything out and negotiate the best price by doing this. The quality of the broker you chose, the timing of the deal, and the reason for your sale are just a few of the factors that will affect how successfully you sell your company. Here are a few steps to help you navigate the sale process and make the most out of your company exit plan.
Step 1: Get a Professional Valuation for your Business
The process of valuing a business is not always simple; to ascertain your company’s genuine worth, you may want the assistance of a valuation firm. Additionally, hiring a third-party company for the valuation will give the asking price credibility. To find prospects and determine a fair price, the appraiser will consider everything from inventories to sales, debts, and other business assets.
According to statistics, 80% of the average business owner’s net worth is related to their company, therefore getting it in the best possible shape for a sale is essential to their ability to continue operating after the sale. Depending on their location, market demand, financial health, company’s core values, small businesses can be valued at 2 to 5 times their yearly cash flow, plus any optional positive indicators.
The primary concern for many small firms is cash flow, and it is extremely likely that the value of their physical assets will be restricted to the contribution they provide to the business’s profits. Small firms with yearly cash flows of under $100,000 obtained sales prices that were roughly 1.90 times their annual cash flows, according to most B2B marketplace. Additionally, those with $300,000 in cash on hand or more received a multiple of 2.81. It’s vital to remember that smart business buyers won’t be satisfied with cash flow alone; you may need to give potential purchasers a plan for how the company may expand and prosper after your departure.
Step 2: Organise your Financial Health
Buyers are searching for firms that will not only be profitable but also have long-term viability in the current economic situation. Many people think about things more and do their research before making an offer. It is your responsibility to get them in order before putting your business on the market because astute buyers will consider everything from machinery to real estate and business accrual-based financials. Review your financial accounts and tax returns from the past three to five years in conjunction with an accountant or company consultant.
Make a list of the goods, equipment, intangible assets, and any intellectual property that you want to sell along with the firm. In order to help potential buyers understand how you operate your firm, you could also share information on the company’s management or provide an operating handbook. Buyers are searching for turnkey operations.
Aim to organize and show all documents in a way that is helpful to the customers. To ensure that customers understand what they are purchasing, you must be completely honest and shouldn’t omit any relevant information. They’ll give a consistent and cohesive tale of the history and future business, saving you a ton of time and potential headaches.
Step 3: Plan your Exit
Business owners are advised by experts to plan their exit a year or two in advance. Being organized and ready can help you improve your sales, financial records, and clientele, which will increase the appeal of your company to possible purchasers. Timing is crucial because statistics show that just 20–30% of firms put on the market will really sell.
When times are good, you want to sell your company. Buyers prefer to purchase a developing, successful firm. The experts cautioned that selling your firm overnight won’t guarantee you a respectable profit. Markets change frequently, thus it is your duty to be informed of the most recent developments to position your business as a pioneer in your field.
Avoid selling your business when times are tough. If you permit that to occur, your business’ worth will decrease or you risk suffering a big loss. According to experts, the optimum moment to sell a business is when it is financially sound. Lack of an exit plan is the worst error you can make. Before an unexpected circumstance compels you to sell, implement an exit strategy if you want to earn the most money for your company.
Step 3: Get a Professional Business Broker
As with many business owner who express their intent to sell their business, they often opt to do it themselves by listing their business on one or more B2B marketplaces out there. However, to have better chance of success in selling your business, get our knowledgeable team of business brokers to appraise your enterprise.
Our brokers know how to package and market your firm for maximum visibility and buyer interest, as well as where to offer your business for sale through our experience which is crucial in early stages of selling your business. We have access to a sizable network of potential buyers, know how to locate a buyer for your company, and have a systematic vetting procedure to make sure potential buyers are real and have the resources to move a deal along. You may be guaranteed that full confidentiality will be upheld during the sale of your business. We’ll haggle for the best price for you once we’ve received official expressions of interest as if you WIN, we WIN together.
When making major decisions in life, it helps to have support, and Intellinz will be there for you every step of the way. Get in contact with us right away for a free business appraisal or a no-obligation discussion about selling your firm.
