Set Yourself Up for Success: How to Sell Your Business Right
Selling a small or mid-sized business is a major milestone that requires careful planning. Getting the best price means preparing well in advance.
In this post, we’ll outline the three critical phases of a sale, from organizing your finances to maximize valuation to identifying the right buyer for your goals to navigating the closing process to avoid last-minute hang-ups.
Preparing Financially: Organizing Records for Maximum Valuation
Buyers and lenders will scrutinize your books, so clear, accurate records are essential when you’re selling your business.
Working with an accountant or CPA can help you clean up any discrepancies, reconcile accounts, and, if possible, obtain reviewed or audited statements. Well-organized, CPA-reviewed financials can help boost your credibility with buyers, leading to a higher sale price.
That said, it’s advisable to get a sense of your company’s worth before listing. To do so, you can use the free online business valuation calculator from Sunbelt Business Brokers.
This tool uses current industry data and up to three years of your finances to generate an initial estimate of your company’s value. A precise estimate can help inform your price expectations and highlight any areas to improve before marketing the sale.
Finding the Ideal Buyer: What to Look For in a Good Fit
Once your business is ready to sell, the next challenge is finding the right buyer. The highest bid isn’t always the best outcome — you want a buyer who can close the deal and carry the business forward.
Don’t be afraid to ask for proof of funds or a financing commitment early on in your talks. A buyer with solid cash reserves or loan pre-approval can help you avoid the nightmare of a deal collapsing because financing fell through.
Additionally, the buyer should generally share your vision for the company’s future. Are they planning to grow it, keep key staff, or change direction? Look for buyers who appreciate your brand identity and important employees. This cultural fit can ensure a smoother handoff.
Use these criteria to filter and negotiate when selling your business. Craft your marketing materials and discussions to appeal to your ideal buyer profile. Networking, industry contacts, and business brokers can help you reach qualified buyers who meet your standards.
The goal is to attract multiple bids, then choose the deal that best matches your criteria, not necessarily the highest price. Careful buyer selection will protect your legacy and minimize the risk of issues later.
Closing the Deal: Avoiding Last-Minute Complications
Even with great preparation and the right buyer, deals can still stumble at the finish line. The final stretch — due diligence, legal review, and signing — is fraught with potential pitfalls.
To avoid problems, be transparent (and prompt) in answering the buyer’s questions once due diligence starts. If the prospective buyer uncovers an unforeseen issue like old debts or accounting discrepancies, it could derail the deal.
To avoid this possibility, voluntarily disclose known problems early so there are no surprises later. Keep a digital data room with all requested documents and monitor it closely. Addressing diligence questions quickly demonstrates cooperation and keeps the sale process moving.
Also, work closely with your attorney and accountant on the final documents. Make sure the purchase agreement, non-compete agreements, transfer documents, and any transition services agreements are complete and reflect all negotiated terms.
Once everything is signed, prepare for a smooth transition. Introduce the buyer to key staff and clients, hand over financial records, and transmit critical institutional knowledge.
Your Path to a Profitable Sale
The seasoned brokers at Sunbelt Business Brokers have guided many small and mid-sized companies through successful transitions. With years of hands-on experience and a focus on your goals, we can help you make informed decisions when you’re selling your business while keeping every detail private. Contact us today to learn more.