After you’ve made the decision to sell your business, you may feel lost about the next step. Although finding a buyer and signing on the dotted line may seem simple, there’s a myriad of legal and financial steps to ensure you’re protected. Following the right steps to sell your business helps you get the best price and ensures you’re ready for your next adventure.
1. Prepare the Business and Yourself
Preparing yourself mentally for the sale of your business is something many entrepreneurs overlook, but it makes the entire process easier. The decision to sell is one of the biggest in your life and brings a lot of stress. Take time to research how long selling may take, so that you’re prepared for the timeline. Many advisors also suggest mentally preparing yourself for letting go a business you’ve built from the ground up.
In addition to mental preparations, there are practical steps you can take to prepare. It’s easier to arrange marketing materials if your paperwork is prepared beforehand, including legal and financial documentation. There are also steps you can take to make your business more valuable, such as updating software, brightening premises and making yourself obsolete.
2. Gather Your Team
Working with a team of professionals can help you sell your business faster and ease your stress. Key team members include your accountant, solicitor and business broker. An accountant can help you ready the financial paperwork for your sale and also advise you on the tax implications of the sale and what to do with your hard-earned profit. The solicitor is there to ensure your sales contract is airtight and has terms that suit both you and the buyer. A good business broker is the key marketer of your business. They can concentrate on selling your business, while you keep your focus on running the business.
3. Get a Realistic Valuation
It’s essential that business owners get a realistic valuation before they put their business on the market. An overpriced business will sit on the market for a long time, growing stale and leading to a price drop. Under-pricing may also lead to problems selling as potential buyers wonder what issues they can’t see. It’s hard for business owners to be impartial about their business, so take time to get an objective valuation. Your business broker can help with this and guide you on the best asking price when it comes time to market.
4. Find a Buyer
Your business broker is your marketing guru who can help you with the all-important task of finding a buyer. They understand how to write marketing materials that make your business appealing while keeping your confidentiality. Business brokers cast a wide net when looking for a buyer by advertising in places where people are searching for businesses. They also have a network of prospective buyers and may reach out to people they know who are looking for a business like yours. Don’t forget your own contacts in this stage of the process. You may have an employee or other acquaintance who you could be interested. Just remember how important confidentiality is to the process and ask your broker for advice before reaching out.
5. Closing the Sale
Once you’ve found a buyer, it’s time to close the sale, which can take longer than sellers expect. Once an offer is made, buyers and sellers negotiate about the price and conditions of the sale. After this, the buyer does due diligence. Preparing paperwork at the start of the process can help this stage run smoothly. During this time, a buyer also finalises finance, leases and licenses.
Settlement day is the end of the process and when you can hand over the keys to your business and reap the rewards. Selling your business isn’t as complicated and it may seem at first but working with a professional can definitely make navigating the process easier. Once you’ve found a buyer and closed on the sale, your only worry will be deciding what to do with your profits.
If you’re thinking about selling your business, come speak with a LINK broker at one of our offices throughout NZ.