<img height="1" width="1" style="display:none" src="https://www.facebook.com/tr?id=349935452247528&amp;ev=PageView&amp;noscript=1">
Search
word-map-thumb

The Alternative Board Blog

When It’s Time To Sell Your Business

Jul. 15, 2021 | Posted by The Alternative Board
Business Planning

After all the hard work that goes into starting and maintaining a business, deciding years later to sell that business can be among the biggest challenges in a CEO or business owner’s career.

You’re certainly an expert in your own field, but unless you have experience in selling a business, chances are you need to fully prepare yourself and your company for the challenge ahead.

The good news is, there are many steps you can take, as well as any number of professionals who can assist you when the time arrives to sell. Keep these tips in mind:

Choose the right team of advisors.

Once you’ve made the decision to sell, it’s time to put together a team of advisors to help educate you and guide the process forward. Key advisors can include:

  • A business broker to assist in raising market awareness of your company
  • An accountant or lawyer to address tax, legal, and financial matters
  • A business coach who offers a broader perspective on the proposed transaction

Another valuable resource is membership in a peer advisory board like TAB (The Alternative Board.) As a TAB member, you’ll benefit from the insights and experiences of fellow business owners who have gone through the selling process in the past.

Know the value of your business.

Understanding the true value of your business is essential for knowing what price to ask for it. The primary elements of valuation are cash flow and EBITDA (earnings before interest, taxes, depreciation, and amortization). Potential buyers may also weigh any significant revenue your business is generating against overall liquidity and access to available cash.

You might assume a business that’s generating significant revenue should justify a higher asking price, but buyers often take into account numerous other factors, as well. These might include how long the business has been profitable, the overall performance of the management team, the status of relationships with key customers, legal considerations, etc.

This is where enlisting the services of a skilled CPA and/or business appraiser becomes essential.

Be disciplined in keeping your plans quiet.

Until later stages of the selling process kick in, there’s no need to spread the word you’re contemplating a sale of the business. You don’t want to send “customers or clients into panic mode,” notes Business.com, so “it’s probably best to keep an impending sale quiet until you have identified a buyer and finalized the details of the sale.”

Attend to any lingering business issues.

Want additional insight? Read 9 Steps to Safeguard Your Business to learn more

DOWNLOAD

No buyer will be interested in a company with a lot of “unfinished business.” Are there customers with long-standing gaps in accounts payable? What current projects are near completion, and do problems exist that are holding up deliverables for other customers? Cleaning up the balance sheet, getting rid of excess inventory, and attending to other loose ends is critical to making your business more attractive to potential buyers.

Be ready with answers to a buyer’s inquiries.

Buying a business is a huge undertaking, so you can understand that prospective buyers will have many questions for you. Obviously, the key question you need to answer is “Why are you choosing to sell your business now?” Buyers also want to know more about the valuation process, how your absence as CEO or business owner might affect things going forward (once the sale goes through), and related questions. Don’t get caught flat-footed when the buyer Q&A process comes around. The better your answers, the stronger the case is for selling the business when you want to.

Keep things running smoothly.

As noted, the sales process can be time-consuming and demand a lot of your attention. But you can’t afford to abandon oversight of current business operations. The US Chamber of Commerce reminds us that “the deal isn’t done until everyone signs the paperwork.” If there’s a sharp decline in revenues during the negotiating process, “the buyers could come back to the table and ask for a lower price.”

Want to learn more about how to properly assess your business and get it prepared for sale? Register for our free TAB Boss Webinar, “How to Make Your Business Irresistibly High-Valued.”

 

 

 

 

 

 

Read our 19 Reasons You Need a Business Owner Advisory Board

DOWNLOAD

Written by The Alternative Board

Related posts

How to Reduce Organizational Complexity and Boost Productivity
Sep. 2, 2021 | Posted by The Alternative Board
  As in our daily lives, the world of business has grown a great deal more complex in recent times. Generally speaking, every organization finds itself challenged by innovations in technology,...
5 Ways To Tell When Your Business Needs a System Overhaul
Aug. 17, 2021 | Posted by The Alternative Board
We all know that businesses need to accomplish many tasks each day for their companies to function. And they need to complete those tasks efficiently, smoothly, and quickly to thrive. As an...
3 Ways to Successfully Transition Your Business To New Owners
Aug. 5, 2021 | Posted by The Alternative Board
Transitioning your business is one of the most critical and life-changing decisions you'll make as a business owner. If you handle the process well, you will be helping not only yourself, your team,...
Tips on Grooming Your Business Successor
Aug. 2, 2021 | Posted by The Alternative Board
It may not seem possible now, but the day will come when you no longer run your business (either as a CEO or business owner). Recognizing this inevitability is the first step towards selecting and...
What to Tell Your Employees When Selling the Business
Jul. 29, 2021 | Posted by The Alternative Board
Selling a business is often a complicated process. One complicating factor for any CEO or business owner is determining what to tell employees about the pending sale, as well as when and how much....
A Guide For CEOs —11 Ways To Make An Impact In Your First 90 days
Jul. 13, 2021 | Posted by The Alternative Board
Your first 90 days as CEO will set the tone for your entire tenure in the organization. Therefore, this is a crucial time, and the goal is to establish your credibility and trust, so the team and the...
How to Ask Customers for Referrals
Jun. 7, 2021 | Posted by The Alternative Board
Spend all the money in your marketing budget and you’ll hopefully see some favorable results, particularly in new customer acquisition. But this approach will also consume a great deal of time,...
14 Habits Of Highly Successful Business Owners
May. 21, 2021 | Posted by The Alternative Board
Success doesn't happen by chance. Highly successful entrepreneurs share many habits, and they often incorporate small practices into their daily routine. We asked our TAB members what habits have...
Use Your Company Culture as a Competitive Advantage
May. 18, 2021 | Posted by The Alternative Board
Every business needs a competitive edge, whether it’s in the quality of their products or services, their dedication to customers, or some other aspect they can leverage to outdo their competitors....
17 Essential Traits of Successful Entrepreneurs - Part 2
May. 10, 2021 | Posted by The Alternative Board
In our last post, we began to review 17 Essential Traits of Successful Entrepreneurs. Here we will continue looking at additional great tips from the TAB community.  #8 Endurance in the face of...