There are number of significant factors to consider when preparing to sell your business. Preparation can begin sooner than you realize and usually there is an extended process to be completed before a business can be successfully sold. This is to be expected considering that selling a business is a significant event and a lot of hard work has gone into the business. Below are a number of issues to consider when preparing to sell your business.
Determine Your Objectives:
Before you even begin the sales process, you should sit down and consider what your overall objectives are in the sale of your business. There are a number of possible objectives that range from continuing to be involved with the business to complete retirement. It is important to determine your objective before you begin the process.
What Are the Key Terms Before Negotiation:
Before walking into the negotiation room, you and your advisors should determine what terms are most important to you in order to sell the company. If this is clear at the outset of your negotiation it could prevent headaches down the road.
Is Your Company in the Proper Corporate Structure for Sale?
Preparing your company by placing it in the proper corporate structure prior to sale is extremely important. Certain corporate structures result in double tax when assets are sold and cash are distributed. A legal or tax advisor can answer questions regarding the proper structure for your business.
Optimize Financial Performance:
Do not forget that the financial climate of your company is what is going to be attractive to most buyers. There are many processes that can be streamlined to cut costs, so you should consider making those changes prior to the sale. If those changes can be reflected positively in the earnings of your company, it can potentially increase the sale price.
What Are the Assets of Your Company?
You should identify all the key assets of your company and verify if there are any legal issues associated with those assets. This could involve any intellectual property or equipment. If there are legal issues wrapped up with some of your company’s assets, you should consider resolving those issues prior to selling your company. Any legal concern could lower your company’s sale price. This includes resolving any current litigation that your company is involved in.
You should incentivize your key employees to stay with your company once the sales process has begun. The process of a sale of the company can create uncertainty and turmoil for your current employees. It is important that you continue to acknowledge your key employees and reward them for any efforts that assist during the sale process.
Be Prepared for Anything, Including For the Sale Not to Take Place:
Even if a deal seems airtight, there is always the possibility that the sale will not go through. Thus, it is important that the company continued to thrive and do well during the sale process.