There are numerous considerations when a business owner is looking to sell his or her company. Many business owners try to sell the company too quickly and do not make the profit that is expected. Here are a few things to do to make sure that your business is ready for the market.
Open Up the Books
Providing all pertinent information related to the financial structure of the company is also essential when looking to attract potential buyers. Before opening up the books though, you should consult a professional to get things in order.
Show Positive Growth Outlook
Once you open the books, you’ll want to make sure that the company has a sustainable expectation of positive growth. Having the numbers to support this is necessary to get the best value for your business.
Most businesses will also need to show a diverse set of revenue streams available for the new owners. Businesses that grow quickly on one revenue stream tend to get fewer, and weaker, offers.
Show That the Business Can Survive Without You
You don’t want your business to seem too dependent on you. Potential buyers will want to feel secure in the fact that the business will continue to thrive after your gone. The numbers should help bear this out and identifying key personnel also goes a long way to providing a sense of security to the new owners.
Partner with an Industry Professional
Partnering with an investment banking professional or business broker can greatly improve your position in the market and at the negotiating table. Business owners may be savvy at negotiations but can be overwhelmed by the myriad of detail that goes into a business sale.
An industry professional will be driven to maximize the sale price for their client. They will have connections within the industry, which can lead to faster sales and higher prices.
Separate Emotion from Business
Using a financial professional as an intermediary can also help to reduce the amount of stress experienced by a business owner when they are emotionally attached to their company. This is beneficial for individuals who were trying to take the tendency to ignore potentially good investors out of the equation because they have a personality conflict with them. It’s not always easy to separate emotion from a good business decision, particularly with something that means as much as a business.
Getting Multiple Offers
Personal restraint is also necessary for business owners who want to maximize the profitability of the sale of their company. One of the biggest mistakes that a business owner can make is to choose to accept the first offer they receive. Having a wide number of potential investors drives up the price. We’ve seen competitive bids take offers up to 20% over listing price.