How to sell a business
It takes more than setting the right price to acquire the ideal match for selling your business. Most business owners sell one business per lifetime so it pays to learn everything you can about the process of selling a business. According to the International Business Brokers Association, only one of six small businesses that are advertised for sale will sell for more than their liquidation value.
Business sellers will need to spell out the value that your business brings to a prospective new owner in terms that are important to your buyer! After all, at the end of the day your business is only worth what someone is willing to pay. Buyers have many buying options and they will review an average of six businesses before buying a business. A well exposed business opportunity can attract dozens buyers before a sale.
Key Points When Selling a Business
- The first rule in selling a business is to maintain strict anonymity until the buyer is adequately pre-qualified. Failure to do this may de-value the business as key employees, customers and vendors may not stay around if they have knowledge that the business will be changing hands.
- Know who is your business most likely to appeal to? What will they be looking for, how much are they likely to be willing to spend, what’s important to them, the numbers, status, lifestyle, hours?
- Expose the business to the largest number of qualified buyers, provide them with an understanding of the business, its current value and growth potential, and skillfully manage the negotiations, due diligence, and escrow processes until the closing of the sale.
- The asking price of the business must make sense to both the seller and the buyer. Research comparable returns for like businesses, analyze the businesses financial records for the current value, and consider future growth opportunities which will help to communicate its full value, and therefore seek a high yet reasonable price.
Selling a business is a complex process that takes considerable more time than most other transactions you have likely done. The process of selling a business will have many frustrations and many ups and downs, but if you properly prepare your business, you will be rewarded with a profitable outcome. The key component to a successful business closing is mutual respect and a level of trust between the buyer and seller. The buyer that sees the most value in your business will likely be a smart buyer who will also pay the most money.