Selling A Business: 7 Tips For A Smooth Sale

There are many reasons to sell a business. It’s possible you may be retiring, ready to start a new venture or simply eager to cash in your years of hard work. Whatever the case, knowing how to sell up is essential. Rushing into it could result in undervaluation, difficulty selling, legal problems or a stressful handover that takes forever. Below are just 7 tips that could help you achieve a smooth sale if you’re thinking of selling your business.

Get your business in good shape

Before you put your business on the market, you ideally want to make sure that it’s in tip top shape. This will help attract buyers and get you the best offers. Start by cleaning up your financials – check that your accounts are all up to date and that you’re tax compliant. It could be worth trying to pay off as much debt as you can. Make sure that any legal disputes have also been settled and that any difficult customers or employees have been dealt with. It’s not always possible to get a business into good shape (you may be selling up, because you are struggling), but you should try to make your business as presentable as possible. 

Accurately value your business

An accurate valuation is essential. Overvaluing your business will deter buyers, while undervaluing your business will leave you regretting that you didn’t ask for more. There are different ways of valuing a business: income-based valuation, market-based valuation and asset-based evaluation. By working with a professional appraiser or accountant, you can find the best method of valuing your business and then decide how to present this value to potential buyers. 

Gather all essential documents

Transparency builds buyer trust – so make sure that you do your due diligence. Gather key documents such as financial statements, intellectual property records, supplier agreements, memorandums of association and other legal contracts. Also consider insurance policy documents, compliance certificates and license documents to show that everything is above board. If you haven’t already got digital copies of all these documents, consider digitising them to make them easier to share. 

Consider using a business broker

You may already have a buyer in mind. If not, finding one will be difficult without a business broker. These companies can help you explore networks of potential buyers and can help handle negotiations for you. Many can also help you with all the preparation work – such as helping you get your finances in order, prepare documentation and value your business. 

Vet each buyer thoroughly

While buyers will be making checks to ensure that your business is right for them, you also need to make sure as a seller that you are vetting each potential buyer. Do they have proof of funds? This is important to make sure that they don’t pull out at the last minute, or to make sure they are able to pay you ongoing installments if you’d prefer this as an agreement. Selling a business can also feel like giving up a baby, and so many business owners want to be certain their business is in safe hands and that their legacy will be respected – making sure that buyers have the right intentions and have business/leadership experience could be vital to make sure that they don’t collapse your business or turn it into something totally different. 

Protect your employees

Any employees that you have are likely to be anxious about the handover. Break the news to them early and reassure them that everything will be fine by introducing them to the buyer in advance and putting in place clauses to protect their positions. If you’re worried about employees voluntarily leaving en masse, consider putting in place retention bonuses that ensure employees get paid a reward if they stay on. 

Be patient and set aside enough time

Business sales aren’t quick flips. From preparation to closing, they can often take at least 6 to 12 months. You will also need to set aside a lot of time to prepare your business before you put it on the market, and then set aside time to guide any potential buyer through all the ins and outs of your business. Trying to rush the process or skimping on preparation could result in a difficult sale. Meanwhile, it’s important that free up time to hand over the reins by not taking on too many new big projects that you may feel compelled to finish – lowering your day-to-day workload will allow you to focus on transferring everything to the new owner rather than having to do it in small stages.