Whether you’ve built your business from the ground up or acquired it once it was established, positioning it for resale can be a tall task. You’ll need to consider numerous factors to ensure that you not only get a fair price for your company but that the transition goes as smoothly as possible.
Being completely transparent with financial advisors, potential buyers, and brokers will help you ensure a smooth transaction. This convenient checklist can help you update your records and valuations in preparation for a sale.
Table of Contents
1. Collect Corporate Documents
In Texas, all businesses should be registered with the Texas Secretary of State. Whether you have a corporation, a limited liability company, or another business classification, you’ll want copies of the organization documents that prove your company is valid and existing in the state. In addition, make sure your company’s bylaws, operating agreements, and stock or membership certificates are available for potential buyers to review. The same goes for updated resolutions and minutes—everything should be recent and ready for client inspection.
2. Financial Documents
Your company’s financial documents are important for brokers and potential buyers. Financial documents dating back three to five years are usually necessary when selling a company. Tax returns, financial statements, profit and loss statements, and any loan agreements should be available for review.
3. Business Valuation
Determining the value of your business is vital but can be a bit complex. You can calculate a business’s value in numerous ways. Some depend on how the business is expected to perform in the future.
It’s wise to work with a qualified broker to determine the best way to evaluate your business and structure a sales price that reflects your business’s current value and earning potential. For help, www.ibexbeyond.com is a great resource.
4. Know Your Risks
Any business comes with risks, and knowing your business’s risks and how to mitigate them can be a valuable selling factor for your potential buyers. Risks can include:
- Employee retention
- Supply chain issues
- Nexus issues
- Disruptions from technology-based products
- Changes in regulatory laws
Addressing a potential buyer’s questions about these issues will help support your business’s reliability.
5. Be Realistic About Growth Potential
Your business has growth potential, so there’s no need to exaggerate. Come to the table with factual data that is research-packed and data-driven. Explain the history of your business’s growth, and how growth will continue in the future. It is better to under-promise and over-deliver your business’s market potential.
6. Tell Your Story
Every business has a start-up story, even if you inherited or purchased it from someone else. Potential investors and buyers should be privy to this story to understand the company’s culture, values, and purpose. Potential buyers can be more likely to invest in a business if the background story resonates with them, so include as many details as possible.
7. Make The Transition Easy
Hiring a qualified M&A broker is the best way to ensure a smooth transaction when selling your business. A broker will handle the transactional documents, sale agreements, and financial transfers to ensure the sale is legal and valid. As a business owner, you’ll be able to continue focusing on your business, keeping operations running smoothly while the broker handles the transactional heavy lifting.
While the transaction is in progress, work toward a smooth transfer of your power to the new owner. Ensure that your employees and subcontractors understand your role and the role of the new owner. This provides a better and more stable transfer of your business and protects company culture and atmosphere.
8. Be Available
As the primary contact for the sale of your business, it will be important to make yourself available to talk to brokers, financial advisors, potential buyers, shareholders, investors, and employees. There will be many people with questions, and having answers at the ready will help everyone involved feel more secure during the transitional period.
Don’t Go It Alone
Selling a business is a major transaction. Attempting to handle it on your own can be overwhelming and result in errors, legal issues, and the disruption of your business. Hiring a qualified brokerage team helps ensure the sale of your business is seamless, and you receive a fair market value.
Sources:
the Texas Secretary of State|SOS.State.tx.us
How To Position Your Company To Sell For An Above-Market Price|Forbes.com
Selling Your Business: Positioning a Company for Sale | The Hartford
