<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

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...
17 Essential Traits of Successful Entrepreneurs - Part 1
May. 10, 2021 | Posted by The Alternative Board
While a great idea and some capital may be essential for a successful business, the most critical ingredient for a successful venture remains the entrepreneur. This is why many successful venture...
How to Sell During Times of Uncertainty
May. 6, 2021 | Posted by Phil Spensieri
If your business is struggling right now, you may be wondering if there’s anything you can do to improve your sales. While there’s no guarantee that any specific strategy will accomplish this during...
Managing Family Business Conflicts
Apr. 29, 2021 | Posted by The Alternative Board
Small business owners and CEOs have plenty to contend with as part of their normal daily operations. When the business is family-owned, a different crop of challenges may emerge. That’s because “the...
Tips on Effective Business Succession Planning
Apr. 27, 2021 | Posted by The Alternative Board
With many family businesses, the time to think about succession planning starts on Day One. It’s a complicated subject, sometimes fraught with emotional baggage, but is critically important,...
Time-Saving Tips for Hyper-Busy Business Leaders
Apr. 13, 2021 | Posted by The Alternative Board
There may be only 24 hours in a day, but with effective time management, business leaders can get a lot done within that limited timeframe. The key is taking steps to eliminate clutter and...