A Guide To Selling A Business

If you own a business there may be a time when you might want to sell it. The process of selling a business can seem daunting and complex, so the more you know about it the easier it will be.

Getting a Valuation

If you are thinking of selling a business it is important to know what it is worth. To get this information you will need to enter the valuation process.
Firstly, you must know that there is a difference between ‘value’ and ‘price’. A value is what a business might be worth with little context, and a price is what the market will actually pay for it. For this reason you must keep an eye on the demand for businesses such as yours, if you sell it in a time of high demand you may get a price that is higher than the real value.

There are many different types of valuation. Most of them will look at the business’ cash flow and other financial statements, its turnover, market and of course, its assets. There are different valuation companies and it is a good idea to shop around. Remember, a valuation is simply a basis for your final price.

Business Brokers

Next, you will need to place your business on the market. This process can be confusing and time-consuming if this is the first time you have sold a business. You should consider hiring a business broker, they will separate the buyers from the ‘lookers’, price your business, tell you how to make it more saleable and help make the deal. You will probably get a higher price with their aid than you would on your own, justifying their fee. If you do not wish to do this there are many business advisory services to help you in this process. You might even consider talking to other individuals who have sold a business before.

Selling Your Business

Preparing for a sale is the most important part of the process. Make sure your operations, assets and financial statements are in perfect condition – they will all be scrutinised. Focus on your strengths; try to eliminate activities that are weak. Put a realistic price tag on your business. This will attract buyers, particularly in volatile markets.

You should also analyse your buyers. Most buyers will be ‘financial’; they are out to simply sell your business on. They may overlook your weaknesses. ‘Strategic’ buyers are more concerned with improving the business or transforming it, and although they pay a higher price they are more analytical.

Selling a business is about negotiation. Stick to your price if you can but do not be afraid to compromise. Do not be bullied on minor details, instead advertise your strengths.