How to Sell a Business Articles

How to Sell Your Business

How to Sell Your Business

January 10, 20246 min read

How to sell your business

How do you sell your business?

Selling your business is a big decision, a decision which you do not just decide in a moment, rather you have taken some time to arrive at that conclusion. However, when you do decide to sell, the question of ‘how’ does come to mind very quickly.

Every business is different and unique, with its own culture and nuances, and the impact of those nuances are taken into consideration when approaching a business sale. However, the truth is that every business goes through the same process when it is time to be sold.

Chapters

  1. How do you sell your business?

  2. Know Your Reason for Selling

  3. Prepare your business for sale

  4. Get a valuation for your business

  5. Find Buyers

  6. Negotiate & Accept an Offer

  7. The legal bit

  8. Complete the Sale

  9. The Handover



Know Your Reason for Selling

Knowing why you want to sell is fundamental to the sale of your business.. It will steer your business sale in a certain direction. It will determine what deal structures may be suitable for you and could even influence the the type of buyer you are looking for.

It will also shape your post sale plan.

Once you are clear on why you are selling, you will be clear in your approach to selling.

Prepare your business for sale

Preparing your business for sale is the most overlooked part of the sale.

I appreciate that some have time restraints when it comes to the sale, but taking the time to prepare your business for sale can result in a huge net gain in your business’ valuation.

From operations to finance, the more you nurture your business towards a sale, the higher chance you will have to get to a satisfactory and profitable completion.

Get a valuation for your business

“How much is my business worth?”

This is the biggest question on every business seller's mind. Understandably, you want to get the highest payout for your years of hard work. So, you go to a business broker or M&A advisor to get the question answered.

The value of your business based on math and markets. There is a quantifiable value to your business based on the numbers your business produces. The good news is that you can do that part yourself. The other part however is a little more complicated.

M&A advisors will look at your business to see how it operates, its unique selling point and position in the market amongst other things and give it a weighting. Any business broker that does not consider those factors is doing you a disservice and not being realistic about what price can be achieved when you sell your business.

Choose a good M&A advisor when getting your business valued to ensure you get to a successful completion.

Find Buyers

Finding buyers for your business is not that difficult in the age of the internet. There are plenty of online marketplaces that cater for selling your business. Finding the right buyer for your business is a totally different story.

There are many different types of buyers out there. Depending on your goals and ideas, one type of buyer may suit you and your business over another. There is no ‘one size fits all’ answer and a good M&A advisor can guide you to what your options may be.

If you work with a broker or M&A advisor, it is their job to find suitable buyers for your business. One of the main advantages of working with them is that they usually have a list of buyers who are in the market. Niche advisers are especially good to work with because they have a targeted list of buyers.

Ultimately, it is your choice who you want to sell to so always make the final decision when choosing a buyer.

Negotiate & Accept an Offer

At this stage of the business sales process, you will receive many different offers.

There are a lot of different deal structures in M&A. This is when knowing your reason for selling and your post sale plan comes to fruition.

Depending on what your goals are you and your advisors will be able to sort through the different offers that you receive. As with any business sale, there will be some that you want to reject immediately and others that are compelling. I always advise my clients to consider all sensible offers and not to be too rash in completely rejecting offers.

Negotiating is always better than out right rejecting offers.

The legal bit

Once you accept an offer on your business the lawyers get involved.

The buyer's lawyer will draft the initial paperwork. Once your lawyer receives the document, they will make the necessary changes to make it more favourable for you. Much of this is left to the lawyers, but the due diligence is where you get involved.

The buyers will conduct due diligence on your business. They will ask for and investigate all aspects of your business. Different buyers go to different depths, but it is important that you stay prepared for detail orientated acquirers.

Just be ready for the paperwork and email load at this stage. It is normally where sellers get stressed the most.

Complete the Sale

The day has come to complete the sale.

Do not be surprised if there are last minute negotiations. There are usually adjustments that are made at the last minute based on business, but some buyers try to take that a little further than they should. Stand your ground and work with your accountant and M&A advisor to ensure the adjustments are justified. If you are all in agreement then you can agree on the sale.

You will sign the paperwork and the lawyers handle the necessary work to make the transfer.

The buyer’s lawyer deposits the funds in your lawyer's account and congratulations your business is sold.

After all that negotiation, paperwork and pressure, you can now take a deep breath and smile. You can take a look at your bank account and make that smile bigger if you really want. That is the sale complete. But this one more step left.

The Handover

Legally the business has changed hands, but there will be stakeholders who need to be informed. From suppliers and main client accounts, they will all have your contact details. Introduce the new owner to them so they know who they will be dealing with from the point of selling your business.

Download the "Sell Your Business" Checklist

If you want to find out more about selling your business. Download the checklist below. It is a step by step guide on how to sell your business the right way.

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Suhail Shaikh

Suhail Shaikh is an business owner, M&A Advisor and content creator around M&A. Highly passionate about all things buying and selling businesses. He spends most of his time working with business sellers helping them prepare and sell their business.

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