Selling your business: find the right fit
Once you've decided that you're ready to sell your business, it's important that you find the right buyer. Determining your business' worth and knowing what you want for your future can help you find the best fit.
Selling your business takes planning; prepare yourself to make the process easier.
- Develop an exit strategy — Plan the timeline for leaving your business; you may need transition time. Is your business ready to be sold? Are market conditions favourable?
- Evaluate your priorities — Figure out the best deal for you. Do you want to protect your employees? Your team may be adversely affected, depending on the buyer.
- Determine your business' market value — Help enhance your business' valuation; do research on your assets, competition, and past earnings. Negative publicity is never good, but take particular care to avoid it when you're planning to sell, as a decrease in brand perception can significantly impact your overall valuation estimate.
- Market your business for sale — Use ads and business selling websites to draw interest. Post information such as a history of your business, the company culture, and your business' potential to attract quality buyers. Reach out to your family and networks as they may be able to refer a buyer.
There are two types of buyers: strategic and financial. To determine the best deal, learn what motivates your potential buyer. Strategic buyers want to expand and enhance their own business operations by buying a business. A financial buyer is usually an investor interested in the cash flow and return generated when buying a business. Choose someone who shares your business values; it helps maintain company culture. Do the buyer's other businesses have long-term employees? This can indicate how the buyer operates.
There are a lot of financial factors to consider when selling. Make sure you evaluate all of your options before you commit to a deal.
- Invest in guidance: Have a trusted financial advisor ensure the buyer is financially stable. Hire an outside source such as a business broker to allow you to focus on running your business.
- Evaluate your options: Think about pursuing a joint venture such as becoming a minority owner, establishing a financial partnership or staying on as an employee. This can help you maintain some control.
- Factor in your financial obligations: There may be tax implications or financial drawbacks for exiting your business. Will waiting another year yield significant tax savings?
You have spent years building your business, so you want it to continue growing with a new owner. Think hard before you sign anything; once all parties agree to the terms and conditions of the deal it becomes legally binding. For more help, check out our section on succession planning.
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