Should I sell my business?
You need at least two years of preparation before putting your business on the market. Make sure you can produce two to three years of tax returns that are accurate and show maximum profitability to get the best price for your business.
How is a buyer going to value my business?
Companies sometimes run everything through the business, such as car allowances, school fees, loading the business with tax write-offs can make you appear less profitable and cause a buyer to undervalue your business.
Do I have strong management team?
It’s important for entrepreneurs to build a strong management team that can bring them through the sales process and help them get the best price for their business.
Is the market right?
Before selling, look at current market conditions the market, the company and your own business sector and, if you can align them all on the upward trajectory, then you should get an exceptional price for your business.
Can I cope with the changes on the horizon?
Rapidly changing technology, increasing globalization and other business trends can prove too much for some business owners. Keep your eyes trained three or four years down the road, and if you don’t believe you can keep up, sell before your failure to adapt catches up with you. “Some people find it hard to leave, but if you wait too long, the industry may pass you by.
Can my business thrive without me or without a key customer?
If a buyer is concerned that a business is too dependent on the owner or a single customer, he may take his offer elsewhere. A good business can operate when the owner is on vacation and has good revenue diversification, where no one customer represents more than five percent of the business.
Would I be willing to stay on if the buyer wants me to?
Sometimes you can seal a deal by agreeing to stay on in a consulting role for a period of six months. If you’re willing to stay on, it might reduce the risk to the buyer and increase the value of the company.
What are the potential deal breakers?
Unresolved issues can rear their ugly head and interfere with a sale, particularly in areas such as company ownership, accounting and intellectual property rights. For example, an owner may have used a contractor to write software for the company without requiring him to assign his rights to the company. This can create questions about who possesses critical rights, which can scuttle the deal. So, consider what your potential deal breakers are and try to resolve them before you’re near to closing a deal.
Would I consider alternatives to an outright sale?
If an outright sale isn’t right for you, we can help evaluate other options. Would you consider selling a percentage of the company to a private equity fund? Or would you do a leveraged recapitalization, which is a loan that puts a portion of the proceeds in your pocket?