For various reasons, business owners sometimes have to sell their company. Few know how to approach this issue professionally and where to start. In this article, we will talk about what the process of selling a business is and how to prepare for it.
1. Price estimation
It is worth starting with assessing the value of your business to understand what kind of offer to make.
Factors affecting the business value:
- Average monthly profit. You will be able to figure out the asking price for your business depending on how quickly it will pay off for the new owner. Typically, the time frame ranges from six months to five years.
- The degree of automation of the processes. If your business has automated processes in which the future owner will not need to invest, then such a business can be sold at a higher price.
- Exposure to risks. If your business is stable and not subject to risks, then its value increases significantly.
2. Collection of financial reports and preparation of the proposal
Before you list your business up for sale, you should collect all the reporting information and prepare a presentation about the structure and key values of your business. This is done so that a potential buyer could be convinced of the reliability and easily assess the business opportunities.
What you need:
- Come up with a catchy headline that grabs the attention of a potential buyer. You also need to describe all the beneficial aspects. For example, let's say you want to sell a company in Dubai that is engaged in Bentley rental cars. The benefits of such a business are obvious.
- Explain the core values of your business. Here you need to clarify the question of what your products are, how you are selling, who your customers are, and what are your competitive advantages.
- Explain your reason for the sale.
- Provide accounting documents so that a buyer can be sure that the business is making profit and what expenses are coming in the future.
- Make a presentation that will be easy and interesting to watch.
- Prepare an ad design that will attract buyers' attention (see an example).
How to make your offer more attractive
The first thing you need to understand is that if you are going to sell your business, then you can probably sell any business. The main thing is to create an offer that will seem tempting for any potential buyer.
If you have studied the seller's market well enough, you will be able to understand how you can present your offer at its best. It is necessary to focus the attention of the interested person on what is the exclusivity of your business in a particular field of activity. For example, you have a database of numerous customers who turn to you because your service is top-notch and they trust your brand. Or you are dealing with a reliable base of vendors who offer their services at less price than to the other businesses. Such an offer will raise you to the top because it is much more profitable to purchase a ready-made business, which has established all the processes. A new owner only has to manage it.
Related: 12 Factors That Make Your Business Easy to Sell
Pay attention to the following aspects that will make your business look better:
- Outline the nearest perspectives. Prepare a report on the changes you can make to your business that will bring even more value over the next few years.
- Ensure the smooth operation of production. During the sale phase, contribute to the development of your equipment that will not break and will perform reliably for many years after the sale.
- Emphasize that your personnel are a fully staffed set of professionals who know how to properly conduct production. Also, tell them that these are people who bring improvements to work every day and are not ready to stop developing. After all, employees are an important asset.
- Do not try to set an asking price that you would like to see. Naturally, you put your heart and soul into your company. However, you should not break away from reality and sell your business at a price that no potential buyer will look at. Make a business plan for the next few years and find out how much profit your business can bring. Based on the calculations, submit an offer that will pay off in the near future.
3. Options for finding buyers
To sell your business in a short time, you need to use as many search options as possible. You can resort to the following options:
- Search for a buyer among your business partners, competitors, clients, or employees;
- Newsletter on social networks. You can publish a post on your company’s page and tell your customers and competitors that your business is for sale;
- Place ads on specialized sites. In this case, you need to work out a high-quality ad that will be more attractive than others;
- Setting up ads on social networks and search engines. To do this, you need to contact a SEO specialist who knows how to properly set up advertising to raise your offer in search results. Such methods will require investment, but using them will increase your chances of quickly finding a buyer.
4. The first contact with the buyer and the appointment
You need to find real buyers among all potential buyers who are truly interested in acquiring and have capital.
You should prepare a short story about the benefits of your business so that the buyer wants to meet personally, where you can arrange a full story about your company and answer all important questions.
In order not to lose one of the buyers, you should keep a shortlist where you can mark everybody and know when to call back and on what day to make an appointment.
5. The stage of direct meeting with the buyer
Prepare ahead of time for the meeting. Conduct practice presentations to help you manage your time.
Spend a lot of time talking with your prospect. Build communication with the client so that you can learn as much as possible about the buyer's intentions. Use your listening skills to be able to come up with a clear reason for buying your business.
If you manage to interest the buyer, then write down all the conditions under which the business will be sold. This is done to arrange the next meeting and finally, arrive at the point of sale.
6. Sale
For the correct execution of the transaction, find lawyers who will prepare all the necessary documents. The buyer can either purchase your business right away or do it gradually after concluding a preliminary contract. You may want to consider seller financing.
How to avoid mistakes when signing a deal
At the final stage, when it seems that the deal is done, you have found a new owner for your business, a moment occurs when the future owner provides you with the terms of the transaction, at which he is ready to buy your business. It is at this point that deals most often fail since the conditions are unsatisfactory.
We invite you to pay attention to the likely conditions and their consequences for you.
- Many people understand that it is often difficult to do business and be righteous. Owners often go out of their way to keep their business running. If your contract contains such a clause, then most likely you will lose a potential buyer and be left with nothing.
- Guarantee of the absence of tax arrears. Even if your company has passed a full check for debts to the state, you cannot guarantee that upon a second check you will not be identified as debts. Special authorities can re-check when they want it, and if they find debts for the specified period for which you gave your guarantees, then you run the risk of violating the terms of the contract.
- Not participating in legal proceedings. You can be one hundred percent sure that your company does not have any problems with litigation for a certain period of time. However, there are situations when the papers from the higher authorities have not yet been transferred to you and you simply have no idea about them and already declare that you are clean. It also happens that a buyer himself can sue you precisely to create such a situation when you violate the terms of the transaction and incur losses. In this case, it is advisable to exclude this clause from the contracts or to establish the necessary filters and time intervals.
When selling a business, it is worth working through all the stages. To do everything correctly, involve a team of professionals who will help to avoid all possible risks.
