Cashing In: What to Do Once You’ve Decided to Sell Your Business

Anyone who owns a business (or even a partial share in one) will reach a point when it’s time to get out. Sometimes that means passing it along to the next generation, while other times it just means selling out to the highest bidder as fast as you can. But, whatever your reasons are, you’ll want to understand your rights and responsibilities, so you can make informed decisions about what to do. And of course you’ll want to take steps to ensure you receive the best possible selling price for your business.  

But if you’re like most business owners, you’ve spent your time building your business, not planning to sell it; you’re in unfamiliar territory. So what should you do if you’re thinking about selling your business? Here are four steps anyone interested in selling a business needs to consider:

  1. Decide on a Timeline:

There are many strategies you can pursue to help you get top dollar from your business, but many of these things take time. And determining your timeline now will help you decide which strategies are worth pursuing and which are beyond your horizon. If you’re looking to sell out and retire in 2 years, you’ll have more and different options than if you want to start a new enterprise in three months and just want a reasonable offer as soon as possible.

  1. Make Your Business as Transparent and Organized as Possible:

This is normally a long-term strategy, but it’s never too late to try to improve your organization to help make the sale. Having good organization and transparency into your operations will help you sell your business faster and receive a fair price at the time of sale. Anyone buying a business needs to be able to understand it to estimate what it’ll be worth to them. If the business is complicated and appears to be run with secrecy and disorganization, a buyer might be unsure how well it is run or what it is worth. Transparency and organization can help eliminate uncertainty and get you a fair offer faster.  

  1. Get an Independent Valuation:

You probably think your business is worth a certain price, but you should be prepared for buyers to disagree. And one of the best ways to indemnify yourself against a pessimistic or lowball bidder is to get an outside opinion of what your business is REALLY worth. There are agencies that specialize in valuing businesses like yours, and they can help you understand the true market value of your business. And whether your gut estimate is low or high, you’ll be better prepared to enter into the purchase discussion if you already have an outside valuation in hand.

  1. Secure Competent Legal Counsel:

Even if you’ve conducted business for forty years without need for much legal help, selling your business is one time when you simply MUST have competent legal advice. An individual or legal practice specializing in business law can help you understand your options and responsibilities for conducting the sale transaction. They can help you draw up documents and enter into a sale agreement with confidence, knowing that you understand ALL the terms and won’t be surprised when the sale closes.

Consider all these steps before you enter into an agreement to sell your business and you’ll be preparing yourself for a successful exit from your company.

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Written by Integrated General Counsel

Our focus includes handling a variety of corporate matters and also includes litigation in state and federal courts. Our current practice includes providing transactional services and representing a variety of small and medium-sized companies as their outsourced general counsel.