Are you thinking about selling your business? Allevi8HQ has developed this ‘Selling Your Business Checklist’ to help you through the process. Whether you’re considering selling your business now or into the near future, or if you live in the US, Canada or Australia, these key considerations will help you to be well prepared.
Selling your business checklist
- Ask yourself, “Am I ready to sell?”
Do you really want to sell? What’s motivating the sale and what’s going to happen after selling your business - Understand the sale process
Know what the steps involved in selling a business actually are. - Know what makes up your value
How did you arrive at the selling price you’re asking for your business? Can you defend it? - Know what documents buyers will ask for
Do you have all the financial and non-financial paperwork prepared? Has it been verified where necessary? - Boost value in your business first
There are measures you can take now that will boost the inherent value of your company and your final asking price. - Identify partners to work with
Which advisor, accountant, lawyer, broker will you work with? - Exit plan
Have a clear plan of how you’d like to leave. If you’re asking for a large sum, consider that it may be paid in installments and how you’ll handle that. - Communicate well
Who needs to be informed of your decision and kept up to date during the process? Usually this includes your spouse, business partners, suppliers, clients and staff. - Be cautious
At the end of the day it’s your business and your decision to sell. Be cautious about who you trust and share information with. - Have a plan
Life continues after your business is sold. Do you have a plan for the future?
Are you ready to sell your business?
Let’s go a little deeper into some of the key checks and balances you should have in mind when selling a business.
The first step in selling a business is making 100% sure that you actually want to sell. If the reason for selling is because your business isn’t performing well, have you considered speaking to a business turnaround specialist first who could potentially turn things around for you? If your business was doing better in 6 – 12 months from now, would you still want to sell?
A staggering 75% of business owners who do sell regret their decision to move on within the first year. Have you considered all the personal and financial implications that the sale of your business might have? Whether they impact you positively or negatively, you need to think through what the future beyond a sale will be like.
How to sell a business
If you’ve decided that you are in fact ready to sell, the next step on the checklist is to actually understand the process of how to go about selling your business. We’ve covered some common exit strategies here that may help you to get the ball rolling.
A key decision that will need to be made at this stage is whether to sell privately or through a business broker. There are pros and cons to both options. A business broker will be experienced at finding buyers and getting a sale. If you’ve never sold a business before you may benefit from having a business broker to walk you through the process, understand the legalities and get a good read of all the potential buyers and pitfalls that you’ll come across.
On the other hand, a broker might not have your personal best interest at heart. They are incentivized by commission and could push for a quick sale over a more profitable one if it is in their interest to do so.
Know what you're selling
Before you or your broker can approach interested buyers you need to know what you are selling. Buyers will want to know what they’re paying for and you need to know exactly why you’re asking the price that you’re asking.
Are you selling a business in its entirety or only part of it? Are you including any intellectual property or tangible assets? Even something like your social media accounts may be of value to the business. Make sure you are fully aware of what you are offering in the sale.
Again if you’ve never sold a business before it may be difficult to understand the real value of your business so it’s worthwhile speaking to an advisor.
Get professional help
When selling a business, you are going to have a lot on your plate. It would be prudent to seek the help and advice of professionals. Allevi8HQ can help prepare your business for sale. Potential buyers are going to be doing their due diligence and need access to up-to-date financial information that reflect the price you’re asking.
You should start this conversation long before putting your business on the market because we can help you identify areas in your business to boost profitability and maximize your value before the sale. From simple things like cutting wasteful expenditure to complete restructuring over a longer period of time, we can help you build real value into your business so that you can get more for it.
And don’t forget about being prepared for all the tax implications (GST, Capital Gains Tax, etc) that the sale of your business will trigger.
Solicitors will also be very useful as there will be a lot of paperwork involved. Along with the actual sale agreement, buyers might want you to sign a restraint of trade agreement to prevent you from starting a competing business. You might want a confidentiality agreement drawn up to prevent potential buyers from sharing your financial information.
The right professionals will make sure you are well protected during the sale process and get the value that you deserve. You definitely don’t want to be caught off guard because you didn’t understand some financial requirements or legalese.
Get all your ducks in a row
Think about everything you would like to see or know if you were buying a business. Make sure you have all that information easily available to potential buyers.
The obvious one is your financials, but there are also less obvious things that will make selling a business a smoother process.
Think about things like:
- Is your property leased and will the new business owner be able to take over the lease agreement?
- Do you have agreements with all your suppliers and if so, when do they expire or will they need to be renegotiated?
- Are your customers aware of a potential sale and do you have existing orders that might be affected by a sale?
- Do you have a list of your current employees?
- Are there any software licenses or management tools that are licensed in your name that the new owner would need to take over?
- Is any of your equipment financed and what would be the implications of a sale to that financing arrangement?
Before selling, consider this
The more prepared you are ahead of time, the less stressful the sale of your business will be. Hopefully this checklist will help make the process of how to sell your business a more enjoyable one.
But before you do sell, consider meeting with an experienced business advisor that can help you with a tailored exit strategy. Whether you’re thinking of selling now or long into the future exit and success planning is essential.
