So, you have made the decision to sell your business. Frequently, you will have run your business for a long time and selling it is part of your retirement plan. It can be an emotional time for business owners. The business has been your “baby” and letting go is not always easy to do. However, the very traits that made you successful in their business will also serve you well when it comes time to sell it.
Selling your business could be as easy as having someone indicate that they are interested in buying your business and you come to an agreement on terms. This could be someone you have a business relationship with and you are comfortable that the sale transaction will go smoothly and your employees will be comfortable with the new owner.
As a smart business owner, you will make sure you have engaged a business attorney and an accountant before having any discussions with potential buyers. You need to understand what your business is worth and you need to understand how to structure the sale and how the process should be handled. Buyers and sellers have different interests with respect to the value, but also with respect to the structure of the sale.
You may want to “shop” your business and create a competitive process, with the hope that you can obtain a better price for your business. Sources that you can use to broker your business include investment banks (usually for large businesses), accountants, industry contacts and businesses that specialize in brokering the sale of a business. You will pay a fee for the services provided by any of these sources, but in some instances, your business attorney can negotiate to bring this price down. It is important that the terms of the agreement with whoever you choose to broker your business are set forth in a contract that clearly spells out the amount of the fee and how it is to be paid.
Selling your business is similar to selling the products or services your business has been selling for years. You should consider preparing a brochure or memorandum that describes the business in a complete and accurate manner. What does the business do? How does it do what it does? What factors give your business a competitive edge over similar businesses? These are broad categories and you will have subcategories of these, as well as other main categories, depending upon the business you have. Financial information, prepared by your accountant, should be part of your marketing memorandum. You want to market the business in the most favorable light possible, but you must provide complete and accurate facts about your business.
Anyone that wants access to due diligence materials of your business so they can make a bid or consider whether they are willing to pay what you are asking, must sign a confidentiality agreement. This serves the purpose of not only keeping the fact that your business is up for sale confidential but in addition, the confidentiality agreement should contain language that states the potential buyer will only use the information provided for purposes of evaluating the sale.
You may have spent a good deal of your life building your business, so protect that investment by engaging the right professionals to help you when it is time for a sale.