Running a business doesn’t have to be a career-long commitment. Companies put themselves up for sale all the time, with spoils going to the highest bidder. Selling a business can be very tricky, but if you’re ready to trade in those years of hard work for hard cash, read on.
The 9 key steps to successfully sell your business
Selling a business for profit can be a long road. Here are the stops on the way:
- Set the stage
Have clear goals and look at the state of the business to identify ways to make it more attractive to potential buyers. - Assess the business’s value
Now you need to determine the value of your business based on factors such as your business assets, revenue and industry benchmarks. - Gather the paperwork
Be sure to prepare every document related to your business, including financial records, contracts and tax returns. - Create a marketing plan
Understand how you can sell your business to potential buyers, all the while striving to maintain confidentiality. Consider highlighting the strengths of your business and its favourable position in the market. - Identify and qualify buyers
Once potential buyers start congregating, vet them for their interest and financial capability. Be sure to issue carefully worded non-disclosure agreements to protect all sensitive information. - Negotiate
Here comes the hard part; talk to each qualified potential buyer about the sale price and the relevant terms, working your way toward a deal that favours both parties. - Address due diligence
Be sure to have all the necessary paperwork in hand so potential buyers can validate the information you’ve provided. - Draft a purchase agreement
Once you’ve landed yourself the best deal, create a legally binding document that lays out the terms and conditions you and the buyer have agreed upon. - Close the deal
As soon as everyone’s satisfied with the deal, make the purchase final and obtain all the necessary clearances.
There are still a few more things to do before you enjoy the profits from your sale, namely:
- Work on the handover. Plan the transition of ownership, preferably before you close the deal. Clearly communicate the change to your employees and provide support and training to the new owner to ensure a seamless transition.
- Fulfil your legal and tax responsibilities. Talk to legal and tax professionals to navigate the tax and legal requirements, as well as any potential liabilities from the sale.
- Follow up. Keep in touch with the new owner to help them as they work their way through the transition.