You put a lot into starting and growing your business. So, selling your business isn’t a decision to be taken lightly. When you decide it’s time to step back and let someone else take over the reins, you’re starting a long process that ends with you exiting the business.
There are a few key considerations when preparing to sell your company. Here are some things to start working on today as you decide the best exit strategy for selling your business.
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Consult the Experts
Before you do anything else, schedule some time to consult with the experts in this arena. Reach out to business brokers in your area and start vetting their services. This gives you time to find a trusted broker who is in alignment with your goals and has the connections to drive the sale.
You’ll also want to schedule time with a financial advisor who has experience in business sales. This professional will be able to identify target areas for improving the business to make it more appealing to a seller. They can also help you generate a realistic number based on what you have to offer.
Set a Realistic Timeline
As the saying goes, the day you plant the seed is not the day you eat the fruit. When you decide to sell your business, you are realistically looking at a few years before everything is completed.
Set a realistic timeline based on your discussions with a business broker and financial advisor. Set actionable goals to help you drive that timeline, as well as identifying what you’ll be doing after the transition is complete.
Clean Up the Books
One of the main areas of focus when selling your business is cleaning up the books. That means addressing any outstanding debts, trimming expenses, and presenting a business that’s profitable and desirable. You should plan on being transparent during this process, as anything you try to conceal will eventually find its way out.
You can expect potential buyers to invest in some forensic accounting to take an in-depth look at your numbers. Conduct an audit to ensure everything is compliant with regulatory and taxation, and that all of your paperwork is up-to-date and accurate.
Define Your Goals and Reasoning
When you are planning your exit strategy, you should set goals for the type of buyer you’re looking for. You also need to consider your reasoning for leaving.
Most buyers don’t want to hear that you’re sick of running a business. Consider your messaging very carefully, and work with your broker to craft an acceptable statement.
Types of Business Sales Exit Strategies
There are plenty of ways to sell your business. Here are some of the common exit strategies business owners use when they’re ready to move on:
- Internal sale – selling the business to an employee or manager who is already familiar with the organization.
- Merger or acquisition – another company buys yours to add to theirs as a second location or to absorb the entity. This could be done if a buyer is interested in your capital assets (a factory, for example) or hired talent.
- Public IPO – take your company public and offer shares. This is a viable option for larger, profitable businesses.
- Sell Your Shares – if you’re in a partnership, you can exit by selling your shares or stake to your partners or to a new, third party.
Non-Sale Exit Strategies
It’s important to note that putting your business up for sale isn’t a sure bet. If the business sale strategy isn’t working, you may need to resort to a non-sale exit strategy. The most common exit strategies in this scenario are handing the business down without a fee, liquidation, or bankruptcy.
Selling a business is a long and arduous process. Working with experts can help you navigate this process and get the highest possible return on your investment.
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