The time has come – you’re ready to sell the business you’ve built over the course of years or decades. Every business owner has their own reasons for selling. You may be ready to retire or move to another city. You may simply be looking for a new challenge or venture. Your sales may be down and your business may need new capital or management to continue competing.
Whatever the reason, selling a business involves more than simply putting up a “for sale” sign on the front window. Preparing for a business sale with a winning strategy will net you better-qualified buyers and a significantly more profitable transaction.
With the right steps, you could get the best possible value for your business, one that reflects all the hard work you’ve invested into growing your company.
How Do You Prepare Your Business for Sale?
First, you’ll want to get a business lawyer involved as soon as possible. You should never go into a business purchase transaction without legal representation. A business attorney can help you not just execute the sales agreement, but also position your company in a way that makes it more appealing to potential buyers. The sooner you get started with counsel, the better.
Your reasons for selling your business will play a big role in shaping your business purchase transaction. After all, one of the first questions an informed buyer will ask is why you’re selling. The negotiations will proceed differently if you’re selling because your company is losing revenue versus selling a profitable company from which you’re retiring.
Second, you should determine what would be a successful outcome from the business sale. Is your goal to sell above a certain price, stay on board as a consultant, ensure your company maintains its original vision, or protect the jobs of your employees? Your lawyer can help you establish baselines for success then target those goals in your strategy.
When Should You Sell Your Business?Theoretically, you can sell your business immediately – as soon as you make the decision that you want to sell. But if you sell right away without getting your company’s affairs in order first, you could be leaving a lot of value on the table.
Think about selling a business similar to selling a home. According to a study by the National Association of Realtors, homes that are staged to be attractive to buyers sell faster and for more money than those that are not staged. The same goes for businesses.
By taking the time to prepare your business for sale, you can address and overcome your company’s weaknesses to make it as attractive as possible to prospective buyers. This could take just a few months or more, depending on what types of adjustments are needed. The difference could mean hundreds of thousands or even millions of dollars.
You can also time the sale of your business with other opportunities in your industry. For whatever reason, your industry may be booming – that could be a high-value time to sell. Conversely, if you’re still profiting in an “endangered industry” that’s shrinking in demand or value, you may want to sell sooner rather than later.
Your attorney can help put together an action plan for selling your business that takes into consideration your personal motivations, time limits, and sales goals.
Preparing Your Business for Sale Checklist
Every business is different and yours will benefit from a tailored approach. Your lawyer can help you get through the steps below to set your business sale up for maximum success.
To get your business positioned for its best chance at success, call the Philadelphia offices of Holmes Business Law at 215-482-0285 or use our contact form to get started now.
Sarah E. Holmes is a Philadelphia business attorney and strategist that helps start ups and established businesses looking to expand, protect their assets and increase their profits in an approachable, down-to-earth way. When you're looking for a business lawyer in Philadelphia, the Main Line or New Jersey, we can help.