Getting your Business Ready for Sale
As a small to medium sized business owner, you are already aware of all the time and effort it has taken to be successful. From the first sale to completing the project and receiving payment, you have been committed to growing your business. Now, you have reached your last and most important sale: the sale of your business and capitalizing on the goodwill you have worked so hard to garner.
When preparing your business for sale, there are many key considerations that will contribute to the smooth transition of operations to a new owner and result in a strong closing price. Enlisting the services of a Business Broker will allow you to maintain focus on operating in a ‘business-as-usual’ fashion and preparing for succession.
The team at Beacon Corporation, business brokers creates marketing documents and listings for your business, screens prospective buyers, and facilitates information transfer and negotiations. Simultaneously, here are some key considerations that business owners contemplating a sale should focus on.
Bidding on Contacts
A company with sales contracts in the pipeline will fetch a higher closing sale price than one who has abandoned sales. It may be a good time to review the market and customer base to reevaluate pricing strategies. Maintaining or growing sales will position your company for a successful sale and transition.
Prospective buyers will recognize the lowered risk associated with purchasing your business and the opportunity will be more attractive.
Maintaining strong records of marketing activities, procedures, and results will assist in the transition of a business and its desirability to a new owner. A strong client list accompanied with relevant data is very valuable to a new owner. Maintaining records on the different types of marketing activities employed is good practice to guide strategy but also to demonstrate value to a potential buyer.
A buyer entering a new industry will be able to build upon the collected data to ensure the continued success during and after transitioning the business.
Employees and Management
Depending on the logistics of the business deal, employee relations must be addressed accordingly. It is good practice to know and understand your employees and have a sense of their reaction to a new owner.
A new owner will appreciate clearly defined job roles and titles. Speak with your managers in confidence to know where they would stand with new ownership.
Accounts Receivables and Payables
Maintaining strong relationships and good credit history with suppliers and vendors will make your business more sellable and more valuable.
A prospective buyer will view these accounts and seek out a positive working capital so the transition can be carried out in a manner that will not create concerns with suppliers and vendors.
Any existing debts of the shareholders and/or business should be evaluated. When a business is sold with debt, the debt value is subtracted from sales price. Another consideration with regards to debt is the buyers’ perception of your business operations. This will vary heavily from industry to industry and must be evaluated in context.
Businesses are as unique as individuals. Each has its own characteristics and each operates in a unique environment. When the time comes to sell your business, contact Beacon Corporation, Brokerage to discuss the nuances of your circumstance. We will go into more detail to improve the value of your business and, ultimately, facilitate the sale and transfer of your life’s work.