Most of us have had to sell something at some point, but selling a business is a totally different kettle of fish. If you’re wondering how to put a business up for sale, this article is a definitive guide to selling your company.
Before we start, you should know that this process is complicated and time-consuming. That’s because the sale of every business is unique. The more prepared you are for a sale, the easier this process will be. You should start by learning about the ways in which you can sell your business.
Here is our guide to selling your business.
1. Prepare for the sale in advance
You might need to start getting ready a year or two before the actual sale is due to take place. This is especially true if you are hoping to sell your business for a high price. Selling a business is quite often about timing. In order to sell your business, you will need a valuation, and valuations are certain to be higher if you have everything in order when they’re completed.
You should also consider the timing of the sale with regard to what is happening in your industry. If you’re in a growing marketplace, timing is going to be even more important. It might make sense for you to wait a couple of years if the industry you’re operating in is set to boom.
2. Get a professional valuation
Do not estimate the value of your business. If you do, you might set the asking price to high, or – even worse – you might sell your company for a fraction of what it is worth. A professional valuer will give you a real idea of what your business is worth based not only on assets you own and revenue you generate, but also the way your industry is set to advance and any talent you have on your team.
3. Increase your sales
It can be tempting when you know you are selling your business to take your foot off the gas a little bit, but remember that selling a business with declining sales will mean you can’t command a high price for it. Most buyers will determine the viability of the sale based at least in part on whether the sales are increasing or decreasing. They’ll want to know if contracts in place are transferable and the number of customers they can bank on receiving when they buy the business, as leaving customers or clients mean a drop in revenue, so it is really important you continue to offer a great service and increase your sales as much as you can.
4. Find a business broker
You might think you can sell your business yourself, but we really wouldn’t advise you do this. Business brokers are the best way to get the maximum value for your business and find you the right buyer. They’ll help you with business valuation, negotiation and due diligence, marketing to and locating potential buyers, securing funding for buyers, and keep confidentiality.
You should know that due diligence is the most complicated part of this process. Over 50% of all business deals fall apart in the due diligence process.
The overall purpose of a broker is to keep you focused on running your business as usual whilst they conduct the sale.
5. Qualify potential buyers
You’ll want to be really careful who you’re talking to about selling your business as not everyone will be serious about buying it, and you could be embarking on a giant waste of time. Lots of business sales fall through when buyers enter into agreements with the sellers and then fail to secure funding from third party investors. For this reason, you will want to pre-qualify potential buyers before you talk to them.
Your business broker will help you to do this, but you’ll basically need to ask the following questions:
- has the buyer secured funding, or do they have capital?
- does the buyer have the capability and capacity to run the business?
- do they have a reasonable timeframe?
Trust us, you’ll waste a lot of time talking to unqualified buyers who decided to buy your business on a whim and aren’t actually able to do it. For that reason, this is a really important step.
Yorkshire Change can help
If you’re selling or buying a business, Yorkshire Change can help. Our change management experts can help you and your staff through one of the most complicated processes any business can face. We’ll talk you through every step of the way, so that the impact on your business is minimal and things can operate as normal.
To speak to a dedicated member of our team, call 0333 090 8710, or email chris@yorkshirechange.co.uk.