Entrepreneurs sell their businesses for a variety of reasons. Regardless of your “why,” if you have decided that the “when” is now (or soon), what should you do next?
Get Familiar With the Process
First, familiarize yourself with the selling process. It will be helpful to have a general understanding of the process as you engage with your Broker/Advisor of choice. The selling process involves the following parts:
- Buyer Vetting
- Broker/Advisor Weekly Updates
- Deal Structures
- Letter of Intents/Offers to Purchase
- Due Diligence
- Closing Documents
Understand Your Valuation
Have a professional valuation conducted on your business so you know what the range of value should be for your company. Remember that your business is worth what someone is willing to pay for it. Most values are determined by weighted averages of EBITDA, Cash Flow, or Revenue. Profit is king here.
Understand how and where your business will be marketed, and help your Broker/Advisor by providing some key strategic targets to engage (or perhaps to avoid). Be involved with the creation of the Offering Memorandum, which is the business profile that will show off your business. Nobody knows your business better than you.
Confidentiality is Critical
Make sure that the marketing material does not have any information that has simply been copied and pasted from your website or company marketing material. Ensure that your Broker/Advisor has a vetting process for potential buyers and has an effective Non-Disclosure Agreement signed prior to providing any information.
Negotiate More Than the Price
Negotiate more than the price. Do not get hyper focused on the purchase price alone; price is one part of the big picture. Understand your tax liabilities, sellers notes, hold-backs, earn-outs, non-competes and consulting agreements.
Due Diligence Readiness
Clean books and records make this process significantly easier. Having the following information readily available will help the process along:
- Financial Reports
- Employee Records and Manuals
- Sales and Marketing Material
- Business Processes
- Insurance Policies
- Benefit Package Policies
- Vendor and Supplier Agreements
Thankfully, from our decades of experience in buying and selling businesses in a wide range of industries, we are positioned to guide you through the selling process from start to finish. If you are ready to sell your business, contact Viking today for a confidential, no-obligation consultation.
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