As with most things in life, the best way to approach the sale of your business is to follow a few simple steps. Finding a buyer and settling on a deal may seem simple enough, but there is a myriad of legal and financial steps you must take to ensure that you are protected; not to mention set up to get the best price for your business.
You used your smarts to get into this venture, and you’re now the owner of a saleable proposition! Why not use your smarts as you prepare your exit? Why not sell your business smarter? We hang our hats on nine practical steps that will help make the selling process as seamless as possible.
Let’s explore them!
1) Planning:
As a critical first step, perform a thorough analysis of the fundamentals; clean up your financial records and avoid unnecessary spending. Assess your involvement, can the show go on without you? Your goal is to maximise profit and structure the business to enable a transfer of ownership with minimum impact on operations and profitability.
2) Business Value Appraisal:
Appraising the value of your business is more sophisticated than deciding on what you ‘think’ it should be worth; your blood, sweat, and tears are only valuable to you. The bottom line is, your business is worth what a buyer is prepared to pay for it. In every instance, we advise using a professional business broker to appraise the value of your business.
3) Documentation:
Everything a buyer needs to know about your business is presented in an Information Memorandum (IM). A professionally prepared IM is a crucial document when selling your business; it must be comprehensive, accurate and represent the business honestly.
4) Identifying Buyers:
It takes more than setting the right price to find your ideal buyer. Access to a database of qualified buyers means greater competition and a better sale price.
5) Marketing:
A marketing campaign must be thoughtfully planned and executed. Good marketing will ensure your business gets noticed from the outset, fail to do so, and your business could sit on the market for too long, the listing will become stale, and perceived value will plummet.
6) Qualifying Buyers:
This process will determine whether your potential buyer is motivated and positioned to complete the purchase. You can waste much valuable time working with someone ill-equipped to see the transaction through to settlement, or worse, miss the perfect buyer while you do so! It’s a time consuming but a vital process, one best left to an experienced business broker.
7) Sale and Purchase Agreement:
Earning a buyer’s trust and confidence is critical to success. On signing a Confidentiality Agreement, the buyer will pour over your IM with a fine-tooth comb. They will consult with their advisors as they assess your business. If all signs point to yes, a Sale and Purchase Agreement will be prepared; this will outline the terms and conditions of the sale and will include a due diligence clause. At this point the business is “under contract” and the buyer is required to make the deposit payment.
8) Due Diligence:
Signing the Sale and Purchase Agreement doesn’t mean the business is sold. The buyer will want to verify the information supplied and review any details not previously available; they will want to do their due diligence. At this point, you’ll be relieved that you took the time to plan your sale and be across all the critical elements of your business. Any surprises could see the deal fall over at the last hurdle. Once all the conditions (including due diligence) in the agreement have been satisfied, the business is declared unconditional.
9) Settlement:
Solicitors will finalise all legal documents, a final stocktake will be carried out, and the sale will be settled. It’s time to celebrate. All your hard has been worth it!
For an in-depth analysis of these steps, we invite you to download our 9 Steps brochure. The decision to sell your business could be one of the most important you ever make; it’s our job to ensure you have all the information you need to walk away with a great result!
Please feel free to contact your nearest LINK Business Broking office for a confidential, no-obligation chat about how we can help you to Sell your Business Smarter.
