Just as you needed a plan to start a new business, you will also need the plan to get out of it. Business is set up not thinking of an exit and there are a lot of emotions and feelings attached to it, but there are times when one needs to think strategically and realistically to move ahead rather than sitting on fire.
Selling your running business is a complex venture that involves several steps and considerations. Here are some tips from various sources on how to sell your business successfully:
- Reason for Sale:- Identify the reasons for selling and make sure they are compelling and realistic. Some common reasons are no succession plan, retirement, illness, partnership disputes, boredom, relocation, funds crises or overwork.
- Timing for Sale:- Prepare for the sale as early as possible, preferably a year or two ahead of time. This will help you improve your financial records, business structure, customer base, and profitability. It will also ease the transition for the buyer and keep the business running smoothly. Consider the business's ability to sell, its readiness, and your timing.
- Business Valuation:- Determine the value of your business and price it appropriately. You can hire a business evaluator to get a valuation or use various methods such as asset-based, income-based, or market-based approaches. You should also consider the intangible assets of your business such as brand, reputation, goodwill, and intellectual property.
- Business Broker:- Selling a business can be a long, daunting experience even for experienced business owners who while having a lot of experience ‘in business’, do not have the same experience in selling (or buying) businesses. Appointing the right business broker brings someone on board who can help guide you through the sales process. The role of the broker is to qualify prospective purchasers and act on your behalf in speaking to interested parties.
- Documents:- Prepare an Information Memorandum which showcases your business to potential buyers. Other documents may include a pitch deck, a financial model, a business plan, tax returns, Infrastructure/Fixed Assets, financial statements, contracts, leases, licenses, permits, employee records, customer lists, supplier lists, etc. You should also have a clear exit strategy and post-sale plan.
- Buyer Search:- Find a buyer and negotiate the deal. This can be a long and challenging process that may take several years. The broker is your guide in this time and have trust on him to get you the right buyer. Look for a buyer who has the financial capacity, industry experience, strategic fit and personal compatibility with your business. Get a non-disclosure agreement signed from potential buyers before sharing any confidential information. You should be prepared to answer questions, address concerns, and provide evidence of your claims. Be flexible and realistic about the terms and conditions of the sale.
- Deal Closure:- After the closure of the deal you need to hand hold the buyer for a time of 2 to 9 months in the business and hand over all documents and secrets of the business. Once the deal is closed, you will need to pay taxes, fees, debts, and other obligations. You will also need to decide how to invest or use the remaining money. You should consult with a financial professional and plan for your future goals.