Preparing your business for sale is a complex topic, requiring more space than we can fit in here. It is important to realize that preparing your business for sale starts long before your business is actually listed. For example, as a business owner you may have chosen to minimize your apparent income for tax reasons. However, from the point of view of a business buyer, the business’ worth is established only by the earnings that can be documented. Your company’s books should be put in excellent order.
If you are aware that you may be putting your business on the market in six months or a year or more, you should focus on doing what you can to maximize your income from the business, to document that income clearly, and generally to make your business a clean business package.
Somewhat like a residential property, when you put your business on the market you want it to show itself absolutely perfectly to prospective customers. This means things need to be cleaned up, organized, painted, and generally spiffed up.
To best prepare your business for sale, you should ensure that both your current suppliers and your current customers are well cared for. Think about this as a business succession plan; suppliers should not be surprised and should be easily transferred to a new owner. Customers should not associate the business with only you but rather with the business itself that can be transferred to a new owner.
When preparing your business for sale, consider some of the mechanisms that may be used in that sale. For example, what legal form does your business have? Is it a sole proprietorship? Is it a partnership? Is it a limited liability company? Or is it a corporation? How do you want to consummate the sale? Are you selling the assets of the business, such as the physical equipment, the name, etc. or, do you want to sell stock in an existing corporation? There are advantages and disadvantages to both options. You should have your knowledgeable business broker help you understand the options, and you should consult with a tax advisor with respect to the financial implications of your choices.
When preparing your business for sale, you will also want to consider what other value you may be offering the purchaser. For example, will you offer training and, if so, how much? Are you willing to finance a portion of the purchase of the business? Financing may introduce additional risk for the seller, but it may also increase the value of the business and provide a long-term stable revenue stream for the seller. Or do you want to have the buyer finance the business through the Small Business Administration (SBA)? Financing the sale of a business through the SBA also offers specific advantages and disadvantages which you should consider with your broker.
Experience the Professional Difference. Let us help you to prepare your business for sale, guide you through the sale process with the highest price, best terms and shortest timeframe. No business is too small or too big for us. Contact us for a free consultation and get your sale process underway:
Broker: Jim Sutton, BRE #01477040
Phone : 408.940.4579
Email : email@example.com