People choose to sell their business and companies for many reasons : illness, lack of time dedicated to it, other personal or economic reasons. When decided, knowing how to sell it is a crucial part. Luckily, if you aren’t sure about the whole process, the best advice is to sell your business with BCMS or similar advisors that will make sure you do everything correctly. If you’re planning to sell your business, here are the most important steps you should consider.
1. Owner’s Goals And Exit Strategies
There are many different options the seller has when selling a business. They often select the particular type of buyer chose by the selling requirements, valuation expectations and strategic goals. Exit strategies include the timing of sale, tax consequences and balance of the owner’s desire to be a part of the company’s future.
2. Determining Value
Determining a realistic valuation where both seller and buyer have similar expectations is a crucial step and it reflects the #sellsavvy. You can have the experts help you out with calculating the value or you can do the market research.
3. Have Financial Information
Financial information, business history and future goals are very important because that way the buyers can clearly see the company’s earning capabilities. That’s why these information shouldn’t be created only for tax purposes, but for sell purposes as well.
4. Organize the documents
When potential buyer evaluates your company, he’ll expect to have all the records and facts organized and documented. This include incorporation papers, corporate government documents, licensing agreements, permits, employee agreements and leases.
5. Targeting The Buyers
Since there are many potential buyers, the owner must first research the market in order to choose the buyers he needs. This includes reviewing the competitors, customers, strategic buyers and other sources of the right type of capital and partnership.
6. Qualifying The Buyers
When you select some number of potential buyers, you should move on to select the best one. You do this by asking them the appropriate questions and screening them. This helps because you won’t waste any time dealing with unqualified buyers.
7. Making A Deal
There are numerous things that must be considered once you select your buyer. Negotiating with the selected buyer include purchase price, stock sale versus asset sale, terms, non-complete agreements, equity ownership, current assets retained by the seller and his financing.
8. IOI, LOI And Purchase Agreement
There are three documents that show the buyer’s interest : IOI (“Indication of Interest”), LOI (Letter of Intent) and Purchase Agreement. IOI gives the proposed terms, valuation and structure for a transaction. LOI is about deal terms, while the Purchase Agreement defines all the details of the transaction.
9. Transition The Business
This is the final phase and it includes transitioning the financing and accounting functions, better understand of the operations and transitioning proprietary information and trade secrets necessary for the business to function.