This is a commercial partnership with Lloyds Corporate Brokers.
So, you are planning to sell your business? The task may seem daunting and a bit emotional. To make the process easy for you, we have made a guide that will take you through its steps and explain what needs to be done.
Perhaps you are struggling with where to start and are afraid you might make a mistake. Hence, planning ahead is important to make the sale as profitable as possible.
You might have made the decision because you are retiring or simply want to try a new venture. No matter the reason, there are a few things you need to consider.
Firstly, you should work with a professional, such as Lloyds business brokers in Adelaide, to ensure the process goes smoothly. People who have expertise in this area will be able to guide you better and give you the peace of mind that your years-long hard work will be managed competently.
"Why are you selling your business?". This is a question you will be asked by all potential buyers, and having the right answer could make or break the deal.
Here are a few reasons you can quote:
As mentioned earlier, selling your business requires planning on a huge level. Not only do you have to focus on every step you take, but you also consider all long-term objectives. If you find yourself looking at short-term decisions, review your plan again and make sure they contribute to your goals. If not, revise your goals.
Here are the steps you need to take to sell your business:
A business owner has plenty of options for selling their business. Two of the most common strategies are based on profit and growth. For example, selling to a strategic buyer is all about getting a premium price for your company.
Sometimes, strategic buyers are competitors who want to eliminate the competition. Therefore, they are willing to pay a high price. The same falls for a financial buyer who might be lower in the pool of buyers but they can make the purchase through financing.
On the other hand, an employee buy-out keeps the business within the company and ensures that only minor changes will be made in the goals. This type of exit strategy contributes to the future success and growth of the business.
Each option comes with its set of pros and cons, so make sure that you consult with an advisor before making the decision.
A business evaluation by a professional, such as Llyods business brokers in Adelaide, allows you to find out what business is worth. It also assists you in setting a realistic asking price that potential buyers will appreciate. Any party approaching you to buy your business will do their own evaluation. So, make sure the numbers match or are close to each other.
You have plenty of time on your hands before the sale is finalised, giving you the perfect opportunity to boost your business's value. Look at all the growth opportunities and hold a discussion between the board of directors and shareholders to determine what can be done.
A few areas that you can work on is reducing customer concentration, streamlining processes, working on core competencies, and more.
The first thing the potential buyers will ask to look at is your financials. This helps them determine whether the business will be a profitable buy or not. So, make sure your books are clean and in order.
Once you have all the paperwork in order, it's time to start targeting buyers. Review your competitors, strategic buyers, customers, and private equity firms to compile a list. Then, start eliminating based on their current vision, which will tell you why they might be interested in your company.
The purchase price of your business is not the only deciding factor in a deal. There are other things to negotiate, such as asset sale vs. stock sale, seller financing, liabilities assumed, employment contracts, and clients.
Now that you have arrived at the end, all you have to do is get the three letters, Indication of Interest, Letter of Intent and Purchase Agreement. You can then work on transitioning the business to the buyer.
And there you have it your business has been acquired successfully by its buyers, leaving you free to pursue other ventures and opportunities.