Preparing Your Business for Sale
The Do’s & Don’ts of Selling Your Business
Preparing Your Business for Sale
Business Owners typically contemplate selling their businesses at different times through their ownership. It usually happens at the time of "business stress." This could be anything from employee headaches to customer problems to real or anticipated downturns or even health reasons or impending retirement. Or sometimes you've just had a rough day. It's not a decision to be made casually, but if, after strong consideration, the decision to sell is made, certain steps should be taken.
1. Prepare and analyze the financial statements of the business.A Buyer will ask for a history of tax returns and/or financial. It will be most important to be able to show profits and owner benefits.
2. Be sure to keep your decision to sell confidential. Employees will be naturally distressed if they are told too soon. After all, the business may not sell.
3. Seek accounting and legal advice on the tax ramifications of a sale. It's not what you get. It's what you get to keep.
4. Take an objective look at your business premises. Are your offices clean, uncluttered and up-to-date? Do the facilities need a fresh coat of paint or new carpet? Potential buyers want to feel comfortable in their work environment. Now is the time to be aware of the look of your business.
5. With a serious financial undertaking as this, it is important to obtain professional assistance. There are unique rules involved in small and mid-sized company valuations and sales.
Our goal is to locate the best possible buyer with the minimum of inconvenience to you, the client, and get the highest possible price for your exceptional business.
The Do’s & Don’ts of Selling Your Business.
In order to ensure that the sale of your business goes as smoothly as possible, we would like to share with you some of the do’s and don’ts in selling a business that we have learned over the years. The sale of your business will go much more quickly, smoothly and successfully if you keep these points in mind.
The following list is not in order of importance. In any given situation, one or more of them can be important. Do be flexible and keep an open mind. The sale of a business encompasses many factors. Don’t take an adamant stand on any one item. Look at the whole picture. Your best interests are served by working with us to negotiate a good offer.
Don’t surprise anyone with undisclosed problems. There is no such thing as a perfect business. Tell Biz Brokers Kenya up front about any current or past problems with your business, i.e. Lower than expected sales or profits, loss of a major customer, lawsuits, etc. Do not try to minimize them or pretend they do not exist. This will enable us to explain them in their best light to a prospective buyer. Almost anything can be explained satisfactorily to a buyer if they are told about it early on.
Do continue to operate your business as if it were not for sale. Since Biz Brokers Kenya only represents good businesses, we are generally successful in selling most of our client’s businesses. However, while we are marketing your business, it is not the time to “rest on your oars.” You owe it to your employees, your customers, and most of all to yourself, to continue to purchase needed equipment and inventory, seek out new customers, etc.
Do minimize your exposure to a prospective buyer. Once you have accepted an Offer to Purchase, try to minimize further contact with the buyer until closing. You, or one of your employees, may inadvertently say or do something that “turns the buyer off.” You have nothing to gain and potentially everything to lose by being “chummy” with a buyer prior to closing. Remember, a sale is not completed until it is closed.
Don’t tell your employees the business is for sale. Most business people are, by nature, honest and straightforward people. Because of this, frequently they mistakenly feel they should tell their key employees the business is for sale. A key employee may look for another job, or accept an offer he may otherwise have turned down if he finds out the business is for sale. You do not want to lose a valuable employee – and neither does the buyer. After all, he is paying you a good price for your business because, among other things, you have key employees in place. The loss of one of these
may jeopardize the sale.
Do try to close the sale as soon as possible. Frequently sellers who have had their businesses for many years feel no sense of urgency about the closing date. They will say something like, “I’v had the business for 20 years, what’s another few weeks?” The longer the period between an accepted Offer to Purchase and the closing, the more chances there are for things to go wrong.
Do use the services of Biz Brokers Kenya as much as possible. We have many years of experience negotiating the sale of businesses, arranging financing, transferring distributor agreements, renegotiating leases, etc. Take maximum advantage of our experience and expertise. Your time should be spent in continuing the successful operation of your business, not in worrying about every little detail of the transaction
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