If you’ve been successful in your business, your efforts have crystallised into a worthy possession, then this would have been the ride of your life. Maybe you think the time has come to loosen the grip and let others take over or just feel that its time to come out now or you just need capital for a new venture.
The reasons may vary greatly, but you certainly demand a reasonable price for your business and you tend to put forward all the potential strengths and pitfalls in front of you and design a selling strategy.
Sell with a reason
A sale should be made with a right reason attached to it. The idea of a sale with the intention to raise finances for other obligations is not successful with people. The need to pay off a mortgage or pay for college expenses or moving to another location is not a positive selling point. In such cases, a healthy deal does not materialise. Sometimes, a price war leaves the matter unsettled. A compromise is essential, neither the seller nor the buyer will get his way. In addition, attach a good reason, to the sale. Flexibility in terms and conditions will help you get you close to the desired value.
Work up the books
Don’t let your documentation pull you down the drain. Your business records are your best weapons in luring prospective buyers to you. Generally, a plan to close the business or passing it on should be envisioned at least a year or more in advance, depending on the size of the business. Your objective should be to raise the value of the business in the market and within. Start by assessing the business records with a view to create audited financial statements illustrating the company’s revenue and growth potential.
The most recent financial year results are critical when a buyer is evaluating a business because purchasers are most concerned with the business as a going concern. However, an analysis of the previous years reflecting the full potential of the business is preferred, it will assure the buyer that your demand is legitimate. The business should present the picture of not only a profitable one but also a cash generating one. Avoid drawing high perks in the last years of the business.