It is crucial that the entire process involved in selling your business is properly planned and that the plan is properly executed from the beginning.
First, you should establish why you're selling your business. Any potential buyer will want to know, and the answer will set the tone for your negotiations.
Are you retiring, overworked, or simply bored and want to explore other markets?
Has there been an illness or death that makes it more difficult to run the company?
Do you have partner disputes you can’t resolve?
Does your company need restructuring?
Are financial or market conditions factoring into your motivation?
Second, think about what you want your role to be after you sell your business.
Do you want to stay involved in the business in any way moving forward?
Would you like to remain a shareholder even if you’re no longer involved in operations?
Would you prefer to keep any intellectual property rights or are those also for sale?
Are any current assets of the business not to be included in the anticipated sale?
Third, consider why someone would want to buy your business. Is your business profitable? The answer to this question will affect its ability to sell and the sale price.
You will likely need to provide prospective buyers documentation showing such things as:
Your business plan, (i.e. if operational history is not present),
Your company’s earned profits,
Your steady or growing income,
The value of your customer base, or
Any lucrative long-term business contracts that you hold.
Put yourself in the position of a prospective buyer looking to purchase your business. The less organized you are now, the more work the buyer will have to do after the sale. A company that appears poorly managed is at best unlikely to demand a premium price at the negotiation table. The more organized and transparent your business operations appear, the more attractive and valuable your company is to any prospective buyer intending to continue operation of the business in the future.
It's never too early to start planning to sell your business and working on that appearance. The sooner you get started, the better you can develop your business strategy, business development, record-keeping practices, customer engagement, and management operations with that goal in mind. The attorneys at The Kyle Law Firm can help, give us a call at: 225-293-8400.
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