Are you ready to sell your business?
As soon as you decide to sell your own company, you have two options. The first one is to sell your company how it stands today with all the strengths and opportunities, but also with all the weaknesses. In this case, you have to be prepared that you will not reseive your asking price. The second option is to invest time and effort to eliminate weak points of your company. Then your company will be more attractive to potential buyers and you will have a better chance to receive your asking price for the company.
How to prepare for the sale of your company?
1) Prepare your list of tasks which are necessary to execute before the sale. In the list, there are all activities which lead to identifying all problem areas in the company as well as an action plan on how to improve those areas.
2) Prepare all documents. A potential buyer will require all sorts of information about your company. This is not only about Financial Statements which usually are required for last 3 to 5 years, but also SWOT analysis, organization charts, list of assets, structure of payable and receivables, marketing plan, certificates, etc… . There is a number of those documents and in order to ensure a smooth transaction process, it is important that they are prepared before the process.
3) Choose the team which will arrange the process of the sale of your company. The sale of the company is one of the activities which should not be executed by the owner himself. For all stages of the process, he needs to cooperate with other persons . This activity starts with the preparation of the Teaser, Confidential Business Report, Financial Statements, preparation of legal binding documents and a number of other activities. The owner has to decide whether to arrange it by himself or to hire an external advisor (business broker). There are several reasons that speaks for hiring external advisors:
- The owner can concentrate on his daily duties while the advisor team markets the sale of the business.
- Advisors prepare all the needed documents and looks after the smooth transaction process.
- While for most owners the transaction is once in life time job, an advisor has great experience and can resolve problems when occured.
- The seller who hire an advisor usually reaches a better selling price
- Advisors have experience on how to keep the process confidential
- An advisor acts as a “buffer” between the seller and the buyer.
4) Elaboration of business valuation: Many transactions have ended unsuccessfully because the price expectation of the seller was unrealistic. As an owner of the business, you should be at least aware what standard valuation methods are used for business valuation. Yes, there are a few methods on how to evaluate businesses but you should know the basics in order to be prepared for the negotiation with the buyer.
5) Preparation of Confidential Business Report, which will provide prospective partners with an understanding of the nature of the company and allow them to assess value. You will need to express all positive sides of your business, but it is necessary to provide true information and not to hide weaknesses. If the information provided will be found untrue, it may result in an abolition of the transaction in later stages. Beside Confidential Business Report a Blind Profile or Blind Presentation has to be prepared. In this Blind Profile, there is rough information about the company for sale but not disclosing the name. It is used to market the opportunity to potential buyers.
To prepare a company for a sale it can take few weeks but also many months. When all processes are done professionally and at the right time, the result will be a smooth transaction process with the highest possible transaction price.