There are numerous reasons that can prompt business owners to sell their firms, and these include ill health, retirement, expansion, poor performance or the desire for a new challenge among others.

If, for you, the time to sell has arrived, you will want to garner the best value for your business. This is only possible when you have the right advice.

This is how to get the right advice when selling a business:

Be prepared

Adequate preparation is essential when planning to sell a business. First, you need to get your books in order. Potential buyers will use the company’s financial information to make a rough estimate of the value of the business.

The more formal the statements appear, the better the impression you will make. The legal paperwork should also be in order. Included in this are review leases, incorporation papers, customer contracts, licensing agreements and other valuable documents needed for the sale.

Get expert advice

 Apart from helping you determine a reasonable asking price, you need expert advice from brokers, business advisors and entrepreneurs who have sold a business before.

 Ask about the average price and size of companies they have sold in the past. Be sure to look for somebody who has sold a company similar to yours in terms of net sales and worth.

 Experts like business brokers and accountants will help you identify potential problems in the financial statements and fix them before the sale.  

A potential buyer will look at the tax returns and financial records in the last three to five years; the accountant should ensure all of these records are available.

 Contracts with vendors, customers and employees should also be current. Here are other records that experts will help you prepare:

• The cash flow statement

 • Separate statements of personal and business expenses

• Employee turnover: use incentives like stock options and bonuses to keep your employees

• The correct classification of employees; buyers avoid businesses that hire independent contractors. The employment attorney should help you streamline this area.

Choose the right professional

Business brokers have made business sales a lot easier. However, with so many companies and individuals offering the same service, it can be daunting to find the right professional for the job.

Here are a few things that can help you choose the right person for the job:

 a) The number of businesses the broker has represented in the past

The broker should provide credible proof in the form of referrals and testimonials of businesses they have represented successfully. Past representations should help you assess their knowledge of the industry and technical competence.

b) How the broker works

You need to determine who will represent your company and what to expect from the broker. A good broker should be accountable, experienced and their interest should be aligned with yours. Initiate an open discussion with the broker to determine their expectations and other important issues when selling your business.

 c) An estimate about the value of the business

Past representations should help you assess their knowledge of the industry and technical competence. b) How the broker works You need to determine who will represent your company and what to expect from the broker.

Here are a few things that can help you choose the right person for the job:

a) The number of businesses the broker has represented in the past

The broker should provide credible proof in the form of referrals and testimonials of businesses they have represented successfully. Past representations should help you assess their knowledge of the industry and technical competence.

A good broker should be accountable, experienced and their interest should be aligned with yours. Initiate an open discussion with the broker to determine their expectations and other important issues when selling your business.

c) An estimate about the value of the business

 A business broker should provide a rough estimate of the business before signing up for the contract. Ask how they have valued the company. Keep in mind that if the asking price is too high, buyers may not be interested.

Do your research

 You will need to do your own research so that you aren’t only relying on the advice of professionals. Becoming informed about your industry and its trends can go a long way in making sure you get the right price in the sale.

 It also allows you to study the market for your business and identify potential buyers for the company.

Find the right buyer

 At the end of the day, all this work, research and advice should have one goal in mind: finding the right buyer.

 Getting the right advice will help you to find a buyer that will be willing to pay a price that you are happy with and will take the company in a direction that will make you feel secure with the decision to sell.

Anyone you hire to give you advice, or any other advice you get, should be helping you to achieve this goal.

By Bruce Hakutizwi, USA and International Accounts Manager for BusinessesForSale.com, the world’s largest online marketplace for buying and selling small and medium size businesses. Bruce has over 7 years’ experience working within the US business transfer marketplace connecting buyers and sellers.

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