Selling your business for whatever reason requires a lot of administrative work to get it ready for sale. After years of investing your time and finances into the business, it’s understandable to want to see a return on your investment as well as see it go to someone who’ll develop further, continuing its legacy. To do this, you’ll need to prepare well for the sale so you can optimise your business’s potential to get a higher valuation and attract the type of buyers you want. In this article, we’ll provide you with tips on how to prepare for your business sale.
1. Build a strong, reliable team
It’s much easier to prepare for the sale of your business with the right people in your corner. Hiring Corporate advisors to assist with the sale is one of the first steps we recommend you take. Selling a large business requires a ton of paperwork, legal requirements, and marketing. Having a team of individuals who know and understand the market will make the sale a lot smoother and will enable you to focus on the day-to-day running of your business instead of all the details surrounding the sale.
A Corporate business advisor will:
- Prepare your business sales plan
- Strategies and create a marketing plan
- Reach out to and source reputable buyers
- Ensure that your company is legally compliant
- Negotiate on your behalf
- Guide you through the process
2. Write down the company story
When you put your business on the market, other companies are going to want to know everything they can about it to gauge whether it’s a good investment for them or not. We don’t only mean financially. Many investors might want to look at the businesses ethics and values, and its history.
Think of writing your business story down as a comprehensive product description. The details you give need to highlight the business’s worth. Create a narrative that outlines how the business started, how it developed to where it is now, and project the opportunities for it in the future. Here’s a short guide for you to follow:
- Disclose your reason for selling. Be sure not to let off that you’re selling your company from a place of distress, as this is likely to push potential investors away
- Share what sets your company apart from others in the industry. You want to give them your unique selling proposition
- If you can, give an outline of what you believe the future will look like for your business. You can use your current profit or growth trajectory to calculate what the business will look like in 5 to 10 years as an example
- Be sure to list what kind of buyer you’re looking for to take over your business
3. Get a valuation done
Getting your business valuation done is one of the most defining moments of owning your business. It basically puts a number to your years of hard work. At this stage, many business owners often see their businesses as worth more than the market value because of the amount of effort they put into building it. So, it’s important to remember that a business valuation is subjective. A business broker would help you do a valuation, but this doesn’t mean that potential buyers will offer you that.
One buyer might see your business as a diamond in the rough, while another might see it as a bad financial investment. Making sure that you have tangible factors to back your valuation is vital. Here’s what we mean:
- Have all of your financial statements prepared, like your income statements, balance sheets, and cash flow statements
- You’ll also want to include how your business has grown over each financial year and whether it’s turned a profit or not. If not, include a plan to help it improve
- How does your business compare to your nearest competitor? Include your comparable sales
- Calculate your EBITDA; corporate advisors can help you with that
- Assess the value of your company assets, both tangible and intangible
- Also, assess your company’s debt and liabilities, which can have an impact on its net value
4. Optimise business production
Before selling, you want your business to look as appealing as possible to investors. For this reason, increasing your business’s productivity on all fronts is one way to do this. Go over your business operations to see what you can change to make them more efficient, whether this be the production line or how your sales team works. This will also help you increase your profitability, which will also reflect well on your financial performance when the business has its valuation done.
Final Thoughts
There is a lot more to do when preparing to sell your business, and it will look different for businesses in different industries. However, preparing well for a business sale is vital and will significantly impact the business’s valuation. Get in touch with a corporate advisor sooner rather than later so they can assist you in preparing for your business sale.
Also Read: Effective Strategies for Creating Sales Funnels That Engage Customers
