How To Get the Best Deal When Selling Your Business
Selling a business requires careful consideration and planning to ensure a successful transaction. After building your company from the ground up, you probably want to get the best deal possible.
However, maximizing the value of your business will extend beyond finding the right buyer. How you present the company and navigate the sale process will also affect your asking price. Follow these strategies to get the best deal.
1. Review Your Financial Statements
Financial statements are the window through which buyers will see and evaluate your business. From the balance sheet to your income statements, all financial records should speak to the value of your company and its growth potential. Therefore, ensure your recordkeeping is accurate, auditable, and accessible.
If you’re selling a small business, hire an accounting and tax expert to comb through the last three years of financial statements. Larger companies should have an audit firm certify these records.
As you look at your statements, reflect on what makes your company different. For example, do you sell a unique patent-protected product that gives your company an edge? Did you carve out market share in a competitive industry? These advantages should be reflected in your financial statements—and they’ll catch a buyer’s attention without much convincing.
2. Don’t Sell Under Pressure
Trying to get a quick sale will almost certainly lower your asking price. Instead of rushing through the process, evaluate your offers and counter them if necessary. Plan in advance to reduce liabilities, obtain payments from outstanding account receivables, and gain an increased market share.
Proper timing will put you in a better position to get the best price for your company. In addition, you can prepare a smooth transition plan for the new owner to take over operations without much hassle.
3. Get a Professional Valuation
While you may have an idea of your business’s value, get a professional opinion based on market standards. First-time sellers tend to overvalue their businesses because of how much work they put in. On the other hand, a professional valuation will use your sales history, the fair market value of assets, and the overall financial stability of your business.
The valuation may also include aspects of the company you didn’t think of- such as marketing strategies, intellectual property, and your business model. A professional valuation boosts credibility and highlights the strengths of your business.
4. You Don’t Have to Get All the Money Upfront
In some cases, you can get an offer that matches your asking price by being open to financing. Rather than making the buyer pay everything upfront, financing a portion of the business gives buyers flexibility and time to meet your asking price. You also get the remaining balance paid with interest, which means you’ll profit from the sale over an extended period.
However, financing isn’t for everyone. This option works best if you don’t require immediate use of all the funds from the sale and you have a long-term vested interest in the company. As you negotiate final terms, obtain a sizeable down payment to access capital for future endeavors.
5. Work With a Broker to Flesh Out the Details
Brokers are an important resource in helping sellers maximize their business value. Brokers participate in the valuation process, help you identify potential buyers, and organize the numerous documents required when conducting due diligence.
A broker will also work with you to develop an exit strategy that fits your financial goals, including preparing for taxes and maintaining confidentiality throughout the sales process.
Are you ready to sell your business and take the next step in your entrepreneurial journey? Sun M&A are the expert brokers you need to get the best deal for your company. We help you package and present your business in a manner that instills confidence and attracts competitive offers. Contact us to seal the deal today.