You may have started a company from the ground up, which makes it a hard choice when selling your business. But if you decide to, here are some reliable tips to help get you started.
Provide All Necessary Data
There is a lot of data that any prospective buyer will want to see. This includes tax data, financial and bank statements, and anything else owned by the company. Additionally, you must provide capitalisation tables (see here how to read a cap table or make one) that show investor and company details. You can save time by handing over digital copies of any documentation a buyer requests. But remember that some might request hard copies of historical documents.
Consider the Timing of a Sale
Similar to housing markets, there are key moments to put your business up for sale. Preparation alone can take years, depending on the size. So factor this into your sale time. If possible, try to predict market conditions two or three years ahead. But also remember that there are things you can’t foresee, such as the global pandemic and sudden supply chain issues. Yet understanding a time scale means you can lay out a solid plan for rectifying any issues before eventual listing.
Hire a Broker when Selling Your Business
It can be tricky to decide whether to use a broker service or not. There are many good reasons for using one, such as saving time, taking care of legal issues and helping a deal reach the end. However, brokers charge a 10% commission and will charge fees for things like listings and ads. Yet if you know who you are selling to, such as another business partner, a family member or a trusted friend, a broker may not be necessary, which also means you maximise your payout.
Find Out What It’s Worth
Of course, it’s vital that you have your business valued. If you don’t, you may face being ripped off and underselling yourself. However, this can be very tricky. And you may also list your business at too high a price and end up with a business on the market for a long time. For a better chance of selling closer to what your business is really worth, it is best to hire a business appraiser. These will analyse everything and create a detailed valuation as a guide price.
Line Up Multiple Buyers
Building a solid network of reliable and interested buyers is essential. Competition of interest means you can capitalise on the highest bidders and negotiate where you need to. However, it helps to keep more than a few interested buyers lined up and stay in contact with them at all times. This will help negotiations, and you can ask about their financial state beforehand. However, make sure you get everything in writing, such as NDAs and a purchase agreement.
Summary
Selling your business can be tricky and time-consuming. But it helps to gather all the data you need, hire a broker if you need to, and keep multiple parties interested in getting a better deal.
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