How to Sell Your Business
Selling a business you have spent years, perhaps even decades, of your life building up is certainly a very emotion-laden decision and one that affects your lifestyle and future plans. However, it also involves many complex financial and legal issues, so much so that it is typical to hire a consultant to guide the seller through the process and optimize the timing/price of the sale.
There are many reasons that entrepreneurs finally decide to sell their businesses, though usually, they never planned to do so initially. It may be to build up a retirement "nest egg," to pay for your kids' college, because of an unexpected illness, out of a desire to slow down the pace, or to finance your next business venture.
Regardless, however, of why you have chosen to sell your business, there are some general guidelines as to how to go about doing it, including the following:
1. Prepare Your Business for Sale Well in Advance
On the one hand, if your business already has a healthy bottom line and you have all of your financial paperwork in order, there may be little to do in the way of preparation, aside from preparing yourself mentally for the transition. In many cases, however, there will be work to do.
You will need to gather three to four years' tax returns, make a detailed list of suppliers, clients, and other contacts important to the business, outline the operating structure and principles of your business, and make a list of all equipment/assets included in the sale. This will require a good deal of time, and it is wise to begin preparations a year or two in advance.
2. Think Through What Kind of Buyer You Want
Many businesses get sold to longtime employees who already know how the business is run and share a desire to see it flourish. It is also not uncommon for a close relative or friend to take over the helm. If these are not options, you will have to sell to a stranger or a competitor.
You might also consider franchising your business and then selling it, or selling it directly to a franchise group. If so, you will want advice from an experienced franchise consultant. Regardless, you will want all prospective buyers to sign a confidentiality agreement and be prequalified for financing before disclosing to them the details concerning your business and its history.
3. Get Help From a Professional Appraiser and Broker
Getting an appraisal from a professional appraiser will do several things for you: force you to get all of your financial paperwork in order to enable the appraisal, help you gauge how much you can expect to sell your business for, and give buyers confidence that your business is worth what you are asking for it. A broker is also worth hiring because he/she can take care of selling your business while you are still spending your time running it.
Also, a broker can keep the for-sale status relatively "quiet" while still obtaining the highest possible selling price. Even with a broker, however, it can easily take 6 months to 2 years to sell a business, so you will need a good measure of patience.
If you are considering selling and/or franchising your business, it helps to get advice from a professional business or franchise consultant. Get a company with good background and years of experience at doing just that.
And in case you still don’t have any ideas what you will be doing after you sell your business, you can think about becoming a business broker yourself. Nowadays lots of companies are selling the rights of using their brand. Becoming and being a franchise consultant could be the next big thing for you. Who knows.
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