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Frequently Asked Questions About Selling a Business
Why should I sell my business with Beacon?
Where do I start when I'm selling my business?
- How do I sell my business?
- When should I sell my business?
- How much is my business worth, and how should I price it?
What are the steps for preparing my business for sale?
- Step 1: The first step in preparing a business for sale is to ensure that it can operate independently without high owner involvement. Owners must create a structured approach and train employees to handle operations in their absence.
- Step 2: The next step is to manage working capital and make sure that the company holds an optimal amount of inventory with an adequate turnover. Businesses that have trouble collecting receivables and operate on a negative cash flow cycle often deter buyers. It is important to make sure that the company is generating strong positive cash flow. This can be done by renegotiating contracts and credit terms.
- Step 3: Another important factor to consider is tax and real-estate planning. Seeking help from professionals for this purpose can go a long way in generating tax concessions and in reducing income tax liabilities during the sale.
- Step 4: From a financial standpoint, other than the obvious top-line growth, it is important to manage expenses in the years leading to the sale. Highly variable expenses with no significant effect on the top-line can be a sign of poor management.
Suppose the company experienced a recent drop in sales. In that case, it is advisable to defer the sale and focus on substantial revenue and cash flow generation so that hard facts can back the valuation.
- Step 5: Finally, on the administrative side, it is important to start organizing paperwork and documenting procedures to make sure the company is clearly mapped-out for potential business buyers. Make sure that detailed documentation of financials, FF&E, property, legal contracts, business contracts and any other related paperwork is maintained and properly formatted for buyers and professional advisers. This will expedite the transaction process and increase your chances of selling your business at a higher multiple.
How long does it take to sell a business?
- What is the industry?
- What is the demand like in the marketplace?
- How many competitors are there?
- How well known is your business?
- How long have you been in business?
- How profitable is your company?
When is the best time to sell my business?
We recommend making sure that any pending litigation is resolved and going through a corporate clean-up to get organized before a sale.
How does my business’s structure impact my selling?
At Beacon Advisors, before anyone goes ahead with selling a business, we highly recommend they structure it to not depend solely on the owner.
Ideally, you should have a manager or a second in command in place who knows the company and the owner and can help a smooth transition to a new owner.
It will make the purchaser feel even better about buying when they know that they will have a team in place that will work with them to teach them what has worked in the past.
How long is a typical time for due diligence to take place once an offer has been accepted?
However, due diligence can run forty-five to sixty days if the business has multiple locations and multiple sets of financial records. For medium-sized companies with dozens of employees, due diligence can run anywhere from forty-five to ninety days.
Contact Beacon Advisors to learn more about buying or selling a business today.
Sell your business in Toronto, Los Angeles, Miami or Washington, D.C. or anywhere else with Beacon Advisors. At Beacon, we help take all of the guesswork out of the administrative prep work you will need to undertake to prepare your business for sale.
We will take the time and walk you through everything you need to know to sell your business for maximum value. We assist with everything from valuing the business to marketing the opportunity, negotiating the terms of the agreement to facilitating and coordinating the due diligence, to the completion of the transaction. We will let you know everything you will need to help give a prospective buyer confidence in purchasing your company.
Even if you are not ready to put your company on the market, give Beacon Advisors a call. We would be happy to provide a free consultation on how to sell your business in Toronto.