Selling a business, no matter how successful it may be, is never an easy task. It requires a lot of time and effort on the part of the owner. Anyone who becomes interested in the business and perhaps would like to make an offer is going to want a tremendous amount of information about every and all aspects of the business before they consider buying it. On top of all of this, you will still have to find the time and resources necessary to maintain your business and keep it functioning as well as it ever had. And then of course there are those pesky legal fees and obligations on top of everything else. Sigh. So what is the best way to go about selling your business?
First things first. You should inform your employees that you are planning to put the business up for sale. It is much better for all involved if employees find out from the owner rather than from hearing it from someone else. Let them know what you expect to come from the sale as far as their positions go. Be positive but also be honest. If you are expecting to be selling the business to an owner who will want to retain the current employees, definitely let them know this. This will probably refrain them all from up and running and dashing after the first new replacement job they can find. It is not in your best interest to have all your workers quitting your company leaving you to maintain all the day-to-day business processes on top of all the extra time you are going to be spending trying to sell it. Besides, should you not find what you are looking for from potential buyers, you may just decide not to sell after all and be left with a business bereft of its valuable employees.
Next you should consider who you may want to sell your business to as well as if you still want to work for the business when the ownership is no longer in your name. Often a prospective buyer will want to keep the previous owner on board to continue running the company. If this is what you have in mind, be sure to get the conditions of your employment in writing. As for who may be the most interested in your company and willing to pay the highest price, consider marketing your business to a larger corporation. Often times, a small business is worth more to an established corporation than it is to an individual. Any corporation that you are currently engaged in any type of cooperative effort with should be targeted as a potential buyer.
The best way to figure what your business is worth and how much you can expect to get for it is to do a little researching into what similar businesses in your area got for their companies. Unfortunately, most small businesses sell for significantly less than what the owner was initially asking for it. Figuring the amount you are likely to get from offers can help to prepare you for the eventuality that you might get less than expected and you may just change your mind about selling at this particular time.
After all of the pre-evaluations, you are ready to go for it. The first thing you need to do to get yourself ready for potential buyers is get your paperwork together. Most buyers like to see profit and loss statements as well as all balance sheets for the last five years of operation of the business. Most buyers will be very interested in who prepared your financial statements. If you normally prepare them yourself, you may consider having a firm prepare them just for the sake of the sale. It often looks much more acceptable to a buyer when finances have been taken care of by a professional. However, should you decide to continue taking care of the business finances yourself as you always had, producing a copy of prior tax returns may help to alleviate any anxiety prospective buyers may have in regards to the financial records of the business.
Finally, you will need to retain the services of an attorney. There are two key areas where it is strongly suggested you use a lawyer. One is when you prepare a circular or brochure summarizing your business for potential buyers. When new owners take over, they sometimes do not have the expertise or zest that a former owner had and the business may not bring in the revenues that it had before the sale. This can sometimes lead to litigation whereby the new owner claims that the business was misrepresented to him in the selling/buying phase. Having an attorney review the material you intend to use to market your business can eliminate lawsuits in the future. The second time it is encouraged that you use an attorney is when you prepare a purchase or sales agreement. Buying and selling a business can be a lot more complex than it looks and the wording of a sales agreement may not say what you think it says.
