It’s Time to Exit. Are you Ready?
Thinking about whether or not you are ready to sell your business is an important question. It’s something that every business owner will have to address at some point. Importantly, there are far too many pieces in this particular puzzle to wait until the last minute to prepare an exit plan. You’ll want to begin the process sooner by asking yourself some key questions.
First, you’ll need to determine the actual value of your business. It is a harsh truth, but the market may think your business is worth less than what you think it’s worth.
This is where it pays to work with a business broker or M&A advisor early in the process. An experienced broker knows how to determine a price that will generate interest from buyers and seem fair. Yes, it will be the marketplace that determines the value of your business, but working with a seasoned professional is an excellent way to match your offering price with what the market will ultimately bear.
Second, you’ll want to consider whether or not you truly want to sell. Many business owners begin the process of selling their business only to realize a few hard facts. Upon placing your business on the market for sale, you may learn that you’re not emotionally or financially ready. Wanting to sell and the time being right to sell are often two different things. If this happens to you, consider it a learning experience that will serve you well down the line.
Get Your Ducks in a Row
After you’ve done a financial assessment, a little soul searching and have begun working with a professional, and have determined that this is a good time to sell, there are several steps you’ll need to take. You can be sure that any serious prospective buyer will want a good deal of information regarding your company.
Topping the list of items potential buyers will want to see are three years of profit and loss statements as well as federal income tax returns for the business. Other important documents you’ll need to provide are lease and lease-related documents, lists of loans against the business and a copy of a franchise agreement, when applicable. You should also have a list of fixtures and equipment, copies of equipment leases, lists of fixtures and equipment, and an approximate amount of inventory on hand. Failing to have this information organized and ready to present at a moment’s notice could be a costly mistake.
Working with professionals, such as accountants, lawyers, and brokers, is a savvy move. Owning and operating a business can be a complex process, and the same holds true for selling a business. Investing the time to seek out experienced and professional advice is the first step in selling your business.