It’s hard to imagine what it would be like for a business owner to sell their company. But the reality is that many entrepreneurs face this decision at some point in time. Selling a business can be complex, and so many things need to go right for the sale to happen smoothly. This post will discuss how entrepreneurs can sell their businesses and help make sure everything goes according to plan!
Understand Why You’re Selling Your Business
This may be the most crucial question to ask before selling a company! Think about what’s motivating you to sell and whether or not it is the right decision for you. Is it because you need liquidity to fund your next startup? Are there family issues or another significant life event that requires you to sell now? Or are you tired of running day-to-day operations and would like someone else to take care of it while you enjoy retirement? Knowing why will help establish other factors that will affect the sale process.
Do Your Research on Valuation, Timing, Strategies, etc.
You don’t want to start selling without doing your homework first! Many factors go into successfully selling a company, such as the valuation of your business, how it will be sold (whether via an auction or direct sale), and when you plan on selling the business.
Work With an Expert Team With Past Success
You need a trusted partner to help guide you through this process. Many clients don’t understand all aspects of selling their company and therefore run into hurdles because they lack information and experience in various areas. I advise working with a team that can walk you through each step of the way, from getting ready for sale to conducting the actual transaction! These are areas where most entrepreneurs make mistakes during the sales process by not understanding what is expected of them or how to respond to different circumstances.
Know Your Preferred Transaction Structure
In most cases, the seller decides how a company will be sold within 10 to 15 percent of the acquisition price. It’s best to know what you want before engaging in discussions with potential buyers and determine if it matches what they are willing to offer you.
Reach Out to the Right Buyer
Find businesses that are likely buyers of your company. I recommend starting with the top 3-5 buyers that you think are most viable, then moving down the list if necessary. It’s crucial to have a wide net because not all buyers are willing to purchase every type of business. When selling, it is essential to find precisely what you’re looking for and determine if you’ll make a sale.
With so many different outcomes for selling a business, the most important thing is to understand why you are selling in the first place entirely. Some entrepreneurs have not taken time to think through their decision and were faced with circumstances that changed their minds about selling.