Right Way to Sell Your Business – Tips and Tricks
Right Way to Sell Your Business – Tips and Tricks. If you’ve been waking up in the middle of the night thinking, ‘I want to sell my business’, you have to get all your ducks in a row before making such a move. Every business owner utilizes tons of resources such as time, effort, equity, investment, and moreover their lifetime and the decision to sell it all is huge.
So it is important to make sure that it is done right from the get-go. If you have been able to create decent value for your business, chances are you can walk out with a fair amount of cash in hand. It is not just about the money that you are going to get at the end of the deal, but also about setting the right terms for the sale, finding the right buyer, and more, all of which can be achieved only if you follow a stipulated structure.
This is the first step you need to take. Putting a value to your business is a good place to start. Financial worth or the assets of a small to medium business can be set according to the profits generated. Not all companies sell just because they are facing a problem or incurring a loss. Factors such as investors and founders trying to exit the business or going in a different direction can also lead to the sale of a business.
The industry that the company is operating in determines the worth of the business. Usually, the business worth can be calculated by multiplying the profits generated in a certain period of time into two or even 10 multiples. If your business is doing great, then you should not have any problem setting a high value for it.
All data and documentation should be organized chronologically to make sure that potential buyers are well informed about your company. With the help of an exit strategist, you can make slight tweaks to make the financial report look attractive.
Having an investment banker on board is valuable, and for those who are worrying about the associated cost, just think about the value of the deal you can achieve with them onboard. An investment banker or even an exit strategist knows how to craft an ideal exit strategy so you can walk out with more money in hand. So, before you go ahead and start making the deal yourself thinking ‘I want to sell my business on my own’, research some exit strategists.
Once you bring investment banker or exit strategist on board, they should prepare an executive summary showcasing your business’ credibility and the financial benefits it can provide to the buyer. This sales or marketing pitch is crucial as it leads you to your potential buyer. Once you have a couple of offers on the table, review them closely to see which is most beneficial to you. Then, allow the buyer to perform due diligence for 120 days or so to determine the value of your business. Once everything is good to go, you can close the deal and open a bottle of champagne to celebrate.
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