Many small business owners want to sell their company quickly and for a reasonable market value. Nothing is more upsetting than deciding, “I want to sell my business,” only to have the market react negatively or receive lowball offers. Understanding the selling process will significantly speed up the process of selling your company.
Follow these nine steps to sell your business quickly.
First, determine the fair market value.
The most crucial phase of selling your company is this. Determining the fair market price necessitates a thorough grasp of your firm and a complete awareness of the market because the worth of a business extends beyond only the equipment, furnishings, and fixtures.
You must speak with a business broker or expert in business valuation who regularly assesses businesses if you want to get a fair market worth.
The following records will be required at a minimum by your valuation expert to estimate fair market value:
Three most recent tax returns
Profit and Loss Statement for the Present
Lease Copy Current Balance Sheet
Because seemingly little details, such as unused Daily Deal coupons, can cause a buyer to back out, it is crucial to be upfront and truthful about your company to determine the Fair Market Value.
The second step is to draft a confidential memo.
The Confidential Memorandum provides brief answers to the most critical queries that potential customers may have about your company. After a buyer has been pre-qualified and signed a confidentiality agreement, this is only disclosed to them. This document significantly minimizes the time spent on unqualified and unreliable buyers. Due to its length and level of detail, many business brokers only create this document for larger companies. Your small business will sell quickly if you use this paper as the owner. This is the cornerstone of your marketing strategy and the standard by which the buyer will assess your company. Selling quickly is an absolute necessity.
Step 3: Confidentially market your company
Once the ideal customer’s profile has been established, it is time to develop an intelligent marketing plan to entice that customer. This could be done by direct marketing, online marketing, or print advertising. The Internet must be used to sell your business quickly because it attracts more than 90% of purchasers.
While some brokers will advertise on 30 sites, others will advertise on over 300 sites. Consider a business broker’s knowledge of web marketing strategies when selecting one if you want to sell your firm quickly. Without a broker, you could pay upwards of $1000 a month to market yourself on these platforms, with no assurance that your company will sell. In this instance, working with a business broker familiar with marketing might speed up and reduce the cost of finding the right client.
4. Review potential purchasers and arrange meetings.
This could be the aspect of selling a business that takes effort. One company may receive 20–30–50 calls from potential customers, and each one must go through a thorough screening procedure to see if they fit the ideal customer’s requirements. This process includes a phone interview, a financial background check, frequent criminal background checks, and a confidentiality agreement. Finding buyers is simple, but finding the ideal buyer requires effort and expertise in buyer profiling.
Unfortunately, when business owner tries to sell their company alone, they don’t thoroughly vet potential buyers, which can have disastrous effects on their business’s ability to operate legally and financially.
5. Presenting the company
When a potential buyer has been verified and, if necessary, the seller has given the individual permission to view the confidential memorandum, it is time to disclose the company’s details.
Before the buyer sees or meets you, the seller, the next stage after the presentation is to determine whether they are serious about purchasing the firm. By only meeting with pre-approved, pre-qualified purchasers who are knowledgeable about the specifics of the business, you may save time.
Conduct a buyer-seller meeting in step six.
It’s time to meet a potential buyer if you’ve identified one who satisfies the requirements, can be financed, has a sizable down payment, and is committed to purchasing your firm.
This allows you, the seller, to get to know the buyer and learn about their fashion sense, outlook on life, and personality. This provides the buyer with an opportunity to inquire further. If the buyer is sincere, a letter of intent (LOI) or purchase agreement is finished after this meeting.
7. The negotiation stage
Everything can be negotiated when selling a firm. Deals can be as inventive as necessary to satisfy the requirements of the buyer and the seller. A few terms up for negotiation include the purchase price, seller financing (down payment and interest), and the length of the seller’s employment. Who pays the commission, among other things? One of the most significant benefits of utilizing a business broker is that a well-trained broker can help structure the agreement so everyone wins.
Step 8: Exercise Due Care
The due diligence phase starts when the offer is accepted. Due diligence is the process of confirming all the crucial facts about the company that are relevant to the transaction.
The questions below should be addressed via the due diligence procedure:
Must I purchase it?
What should I expect to spend on it?
How will I cover the cost?
Due diligence is the buyer’s responsibility and can take a few weeks to several months. If you are giving seller financing, now is also the perfect moment for the seller to research the buyer. This frequently entails properly obtaining permission to investigate a person’s background, financial situation, credit history, etc.
Step 9: Finalizing the transaction
Deal closure is commonplace for those in the business-selling industry. To ensure that all the paperwork is in order, all the necessary documents are present, and your business broker should accompany you to the closing to address any last-minute queries or concerns. Now is not the time to rush the procedure. Without a representative to patch up a deal that has broken apart at the closing table, your company might not be sold.
There are many traps along the route, and selling a firm quickly and for a reasonable market value is not simple. The most expensive thing you can do is try to do it yourself because this may take up most of your retirement. You may sell your business quickly and ensure you get the best possible value by hiring an expert to help you.
Download The 7 Critical Points Every Business Owner Must Know Before Selling to discover more about selling your business quickly.
A Florida business broker named Kimberly Deas specializes in bringing together the appropriate buyer and seller to help firms sell quickly and for a more fantastic price.
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