Nothing lasts forever, not even your company. A company goes through stages, stages of growth, from development to maturity. After maturity, you must exit the business. The question is how and when you should exit. Selling a company is an exit strategy. Selling is relinquishing control of the company. Selling a company isn’t easy; you need to prepare properly before selling to ensure you do everything right and that it will be worthwhile. You need to have a plan for how to make the sale, and to develop a plan, you must ask yourself several questions. Below are 10 questions you should ask yourself before selling a company:
Why are you selling?
This is the first question buyers and your publicist will ask you. There are several reasons why you might want to sell your business. For example, it may not make economic sense to continue operating it, or you need more capital to expand and don’t have the capital or machinery to do so. Perhaps this was your goal from the development stage—to grow the business to a profitable stage and then sell it. Perhaps this business is no longer your passion, and you’re not giving it your best shot. Perhaps you’ve found a new business you want to venture into, and the proceeds from the sale will serve as capital.
Is the company ready to be sold?
It’s recommended to spend two years preparing before putting your company up for sale. Your documentation should be ready and show two to three years of profitability. Align the timing of the sale with the company’s peak performance. You want to get the best deal on the market, and you can only do that when your company is profitable.
Is selling the best option for your company?
Make sure you explore all available options before deciding to sell. A well-established business has its advantages that you may still want to explore. You may need to keep it going and it will do much better. Or, perhaps the best way to exit the business is to sell. Make sure that’s the best option.
What are your expectations regarding the sale?
Your expectations for the sale should be very clear. Define the price you’re willing to accept, the payment options you’re comfortable with, and how far you’re willing to go in the negotiation. Having clear expectations will help the sales process.
Professionals who can help you in the sales process?
In a transaction like this, you’ll need professional help to ensure a smooth sale. You’ll need a lawyer for legal guidance, an accountant to prepare the accounts and tax implications, a financial analyst for guidance on financing options, and a business valuation specialist to help you determine the value of your company.
Do you have the right buyers for your business?
Naturally, you want to leave your company in good hands, so consider your buyers. The need to see your company in the best hands would lead you to have an ideal buyer in mind. However, the more limitations you have regarding your ideal buyer, the longer the sales process may be. However, take the time to identify a good buyer who would lead the company in the same direction you envisioned.
Is it necessary to use a qualified broker?
Finding a good purchase isn’t easy. You can use brokers for this process. They’ll advertise your products for you and maintain confidentiality during the transaction. This will make your job easier.
How are your financial statements?
You need to determine whether your financial statements can withstand the scrutiny of a potential buyer. Buyers dig deep into your company’s financials and analyze every detail. Conduct a financial audit to improve your chances with buyers.
Would I be willing to stay if the new owners asked me to?
What are your post-sale relationship options? Would you be willing to stay with the company after the sale if asked? What else is required of you? Most of the time, you’ll be asked to stay with the company for a few months to help with the transition period.
The next step you should take?
What’s your plan after selling your company ? What have you planned? You need a clear plan for how to use the proceeds from the sale. How you intend to operate, what you have planned for your team, and your future ambitions.
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