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Selling Your Business – Preparation is Key

Selling Your Business – Getting Ready

By preparing your business for sale, you have an 80% higher chance of selling it!

If you are like most business owners, you have some housekeeping to do before your business is ready to sell.  There is likely a list of things you will need to gather, organize, fix, or even create to show your business in the best light.  

We know businesses that sell faster and for more money are the ones that are the most prepared to be presented to the business buyer marketplace and have owners that are calm and collected throughout the process.   

Gather Your Critical Business Information

No serious buyer will make an offer on your business without knowing the ins and outs of the business.  This includes getting to know sensitive and confidential information regarding your business.  Never discount the value of first impressions, including how your business looks and feels to prospective buyers. 

Does it look clean?   Organized?   Well managed?  

Will the buyer be pleasantly surprised by what they see?  

You’ll work with one of our certified business brokers to consider the curb appeal of your business and work toward creating action steps to improve the marketability of your business to potential buyers.

Prepare for Negotiating the Deal

The majority of business deals never arrive at the closing table because the buyers and/or sellers get emotional, take negotiations too personally, and become needlessly contentious in the negotiations. Another key reason that negotiations break down is that sellers encounter unexpected financial surprises. We help you understand the deal from a buyer’s perspective; prepare you for staying objective through deal negotiations, and reduce the risk of allowing emotions to drive your decision-making. 

Remember that your goal is to sell, and not to beat the buyer at a negotiation game. You and the buyer should lay the foundation as a team to get to completion.

Don’t allow yourself to get bogged down in disputes with your buyer. Don’t allow your ego to distract you from satisfying your underlying need to sell. Work with your buyer as an ally. Generate a variety of solutions before deciding what to do about any particular problem. Try to resolve the toughest issues with objective criteria, independent standards, and market norms.

Prepare for the Due Diligence Process

There will be a period of inspection by a prospective buyer as a condition of the contract going forward with the deal called the due diligence period.  This might be anywhere from a 15 to 45-day window of time for the buyer to ask a seemingly endless number of questions and request a variety of documents for inspection by the buyer and her or his professional advisors.  If you have previously taken the time to gather your critical business information, the due diligence stage should go smoothly.  Thorough preparation is a must.  Common representations and warranties that a seller may be required to make as a  condition of the sale include confirmation that: Financial statements are complete and accurate, taxes are paid in full, and all contracts are in good standing and there are no environmental liabilities.

Some common errors that can occur in the process of business sales include unreasonable price expectations, a business that is unprepared for sale, poor market timing, and declining financials.

Operate It Like You Are Going to Keep It

During the entire sale process, you should always operate the business as if you were going to keep it forever.  Nothing drives the price of a business down than year-to-date financials that show a decline in revenues and profits. There is justification for an asking price for a business that continues to grow and is looking to the future. It is critical to the sale of your business that you focus on keeping your business healthy. To learn more about different scenarios that might apply to selling your business, click here. Learn more about what is happening in commercial real estate by clicking here.