Selling a business is the most popular exit strategy for business owners. In some cases, there are no successors who want to continue the business; in others, it was always the business owner’s plan to convert the business into liquid assets at a certain point. Whatever the reason you want to sell yours, following these tips for selling a business will help ensure that you get the best price and that your business sells. You need Carpenter Hawke & Co. to get it done confidentially, and the right way in order to maximize value!
Sell at the right time for the right reasons.
The most common reason for selling a business is that a business owner falls ill or gets too old to continue to run it – the worst time to be selling a business. For one thing, it’s going to be extremely difficult for you to deal with the additional stress of selling a business in those circumstances; for another, the buyer will use your circumstances as leverage against you.
So don’t wait until then. The right time is when you’re still healthy and have a successful business to sell.
The best time to sell is also when the business is performing well. It is all about timing! Whatever your reason, stick to it and always be honest!
Be clear about what you’re selling.
Before selling a business, you need to consider what all the assets of a business are and decide what you are selling. Determine what physical assets you are selling and what other assets you have to sell. Selling a business often includes assets such as good will, trademarks or client lists as well as physical assets.
The value of these will depend on their quality.
If your business is incorporated, you also need to decide if you are going to sell your business as an asset sale (where you sell everything in the corporation but not the incorporated company itself) or a share sale (where you sell everything including your incorporated company).
Determine what your business is actually worth.
Truthfully, your business is worth as much as it will fetch in the marketplace. But determining just what that price is the trick. There are several different business valuation methods ranging from asset-based to future earnings approaches. Of course, no one approach can be used in isolation; the current market, economic trends and what other similar businesses have sold for also need to be taken into account.
We can give you a good estimated value of your business, but at times and under certain circumstances, a professional business valuation should done. Our valuation team headed by Lou Pereira, have all the certifications to properly perform the business appraisal.
Make sure your house is in order.
When you’re selling your business, you need to be especially careful not to let things slide. In fact, this is the time that making the extra effort to keep things in tip-top shape can really pay off. Think again of selling a house; like a house that’s up for sale, you want your business to show well.
So whether you have any interest left in running the business, you need to make sure that you are keeping the business’s records up to date, the inventory up and the premises maintained. People want to buy thriving businesses, not a neglected ones.
You’ll also want to be sure that you’ve reduced your liabilities as much as possible, doing things such as settling any lawsuits and making sure all tax payments are up to date.
Get professional help when selling a business.
Selling a business is can be a very complex transaction, – and arguably, one that has even more emotional impact. Besides providing necessary expertise to guide you through the selling process, hiring professional help can help you maintain the emotional distance and objectivity you need to successfully sell your business.
Which professionals should you hire?
• As already mentioned, a professional business valuator can determine what your business is worth. His or her valuation will be much more credible to a potential buyer than yours. Carpenter Hawke can help!
• An investment banker or merger & acquisitions advisor can be a real boon in terms of finding and dealing with prospective buyers of your business and helping you navigate the sales process. Carpenter Hawke can help!
• A lawyer can draw up and/or review the documents necessary to sell your business, such as the purchase agreement, but Carpenter Hawke can point you in the right direction with an transaction attorney with experience.
One Last Tip for Selling a Business
Selling a business is serious business, so you want to make sure you take the time and trouble to do it right. Careful preparation and using the professional resources available are the keys to getting as good a price as possible when selling a business – and the keys to seeing your business realistically and setting a fair price for it. Carpenter Hawke & Co. partners have 60 years combined experience getting businesses sold for clients, at maximum value all done CONFIDENTIALLY!