Thinking of Selling Your Business? 7 Ways To Execute Your Exit Strategy For Your Business
There is no better time to sell your business than the first of the year. Buyer activity is the highest at the start of each year. Let us share with you 7 key components of selling your business:
1. Preparation: You will need to gather financial documents and provide details to your broker or advisor for analysis. It is also time to continue building value in the business. Train employees to take over your responsibilities post-sale, cross-train employees, collect any over-due accounts receivable, eliminate any unsaleable inventory, and to sell equipment not generating revenue.
2. Valuation: Accurate valuation is pivotal in the sale process. Hiring a professional appraiser can provide an objective market value, taking into account the business’ financial performance, market position, assets, and potential for future earnings. Furthermore, a business broker can provide a market opinion of value as another option. A well-supported valuation forms the backbone of your negotiation strategy with potential buyers.
3. Advisors: Do you plan on selling the business yourself or engaging a brokerage firm? Business brokers bring invaluable experience, market knowledge, and most importantly, thousands of financially capable buyers with industry knowledge.
4. Marketing Strategy: Do you have a marketing plan or network of interested buyers in place? Do you have the time and energy to devote to the process of selling while continuing to operate and build your business? If not, securing an advisor that has closed hundreds of transactions may be the better course.
5. Buyer Screening and Negotiations: Timely response and careful screening of potential buyers is critical to ensure buyers possess the financial capability and serious intent to purchase. So, the goal is to secure the best price and terms with a buyer capable of running the business and securing the financing to purchase.
6. Due Diligence: After the offer acceptance, the buyer typically conducts an examination of your business. Transparency and cooperation during this phase are crucial for maintaining trust and progressing towards the sale.
7. Closing the Sale: The closing is the finish line: executing the final closing documents, funding, and transferring ownership. Involving legal and financial experts is advised to ensure all aspects of the deal are correctly addressed and finalized.
In conclusion, these are a few of the steps to developing an exit strategy that will sell your business. There are many more hurdles that have to be crossed for a successful transaction.
Planning For a Future Sale?
If selling in 3 to 5 years is the plan, then building value should be top priority. So, the biggest thing you can do to increase the selling price of your business is to increase profitability. This can be done by increasing revenue and/or decreasing costs. Below are additional ways to increase the selling price:
- Minimize any owner dependency from the business
- Develop someone to take over your responsibilities
- Minimize dependency on any one key employee
- Cross-train employees
- Collect over-due accounts receivable
- Eliminate unsaleable inventory
- Sell equipment not generating revenue
- Increase your customer count
- Build sales volume with existing customers
Overall, it is a great deal to think about. Reach out to your CPA, transaction attorney, or us to ask questions. Knowledge is the key to making the right decision for you.
Whether you plan to sell now or in the future, a Gateway Mergers & Acquisitions business broker can provide you a confidential, no-cost, no-obligation Broker Opinion of Value. Additionally, you can decide to sell now or use the Broker Opinion of Value as a benchmark to build value for a future sale. This is imperative to developing and strategizing a solid exit strategy for your business.
Call Gateway Mergers & Acquisitions at (972) 219-6961 and let us put our 25 years of experience to work for you.