Once you’ve prepared your business for sale and determined its value it’s time to find a buyer, but that’s easier said than done.
You need to decide whether to sell your business yourself or to engage a business broker to do it for you. Selling your own business can be difficult as it requires specialist skills and resources in valuation, advertising, negotiation and sales, added to the ongoing demands of running your business. The biggest error you can make is neglecting your business during this process and not being able to present a vibrant and successful company in order to negotiate the best deal. Also remember that the gossips in your company will run rampant with the hint of a possible sale and it is absolutely vital to consider your communication position when marketing your company for sale.
Whatever you decide, the successful sale of your business will include the following process.
-Spread the word
-Look close to home for potential buyers:
-Explore your immediate networks. This could include competitors, customers, employees, friends, family and industry professionals. You never know who might be interested in buying your business.
-Your attorney and accountant may also have clients who are in the market to purchase a business.
At this early stage, maintain confidentiality of the sale. Use general terms to advertise your business and place advertisements that don’t divulge your business name. There are many advertising channels to choose from which include:
– Local, state, or national newspapers which usually have a separate classified section devoted to “businesses for sale”.
– Trade journals, specialist publications, or newsletters that relate to your specific industry.
– The Internet – there are many websites dedicated to business sales. Search for “businesses for sale” in any search engine to find the popular sites.
Chances are you’ll get responses to your advertisement from people who are not genuine buyers including competitors, suppliers, employees or customers trying to find out who is selling; along with sellers of related services, sharks who are looking for weak businesses to buy at a low price and those with little or no money or business management experience. Use a proven Qualifying Process to better understand if the buyer is capable of purchasing your company or capable of wasting your valuable time and resources.
Obtain a signed Confidentiality Agreement before supplying private financial records to any potential buyer.
– Once the buyer is satisfied after physically examining your business and analysing the financial statements, they may want to negotiate certain issues before making a formal offer. Think about the following before you start negotiating:
– Negotiation terms and what you want and must have?
– Anticipate compromise and what will you give up?
– Your walk away position and when will you stop negotiating?
Finalizing the sale
To minimise the occurrence of any problems and to ensure the sale is valid involve a professional such as your attorney.
Engage an attorney to draft a contract for the sale of a business as a going concern. Inform the attorney of all the details and issues you and the buyer have negotiated and agreed upon to be included in the contract. You may even want to prepare a memorandum of understanding with the potential buyer and present this to the attorney for the drafting of the agreement. It is much better to have your own attorney draft the original contract as the document will be prepared in your favor and you will not spend frustrating weeks trying to find middle ground from an unfair agreement prepared by others.