Whether you started your business recently or you have spent years building it to where it is today, the decision to sell your business can mean major changes. There are many factors to consider in every sale, and keeping a few key considerations in mind will help you have greater success during the sale of your business.
1. Craft your documents with care at all stages of the sales process.
The sale of your business will involve a variety of legal documents, from your letter of intent to your final contract. According to Forbes, taking care with your contract is especially important if you want to do business in the same industry that the business you are selling operates in. If you have a non-compete agreement, it may prevent future business opportunities.
2. Work with legal and financial experts.
Working with a financial adviser and an attorney that has experience in the mergers and acquisitions process is an important way to ensure that this sale achieves your goals. Your financial adviser can assist you in properly valuing your business, establishing financial documentation that will appeal to potential buyers and addressing future tax concerns.
Your attorney, on the other hand, can assist you in preparing important documents including a Non-Disclosure Agreement (NDA) or Confidentiality Agreement, a letter of intent that will put you in a stronger negotiating position and the final sale contract.
3. You should prepare for the sale earlier than you think.
Retirement is the most common reason that business owners sell their companies, and because you will know when you want to retire you will have time to plan accordingly. However, between 10% and 20% of business owners cite burnout as the reason to sell their business. Because you cannot always predict when selling your business is the best choice for you, it is important that you consider a sale in your long-term plans.
The process of selling your business can take several months once you have an interested buyer, and many brokers recommend preparing at least two years before you want to make the sale. With so much time required for a sale, it is important to keep your finances in order and to ensure that you tie up legal loose ends in your business dealings today so that you have a strong foundation for a sale in the future.