Are you a California business owner ready to move on to your next venture? The process of selling your business can be both challenging and rewarding. Whether you’re selling your first business or your twentieth, working with a certified business broker can make or break your sale.
Here are some tips from The Valley Business Broker Steve Barnett on how to sell your business.
1. Prep Your Business.
The first step to selling your business is to get all of your ducks in a row.
Compile your financial records, including tax returns, balance sheets and financial statements. Make sure these are accurate and up-to-date. Round up other important documents, such as contracts, licenses and leases.
Consider whether you have any outstanding financial, operational or legal issues to address before hitting the market.
2. Enlist the Help of Professionals.
To maximize your chances of a successful sale and increase your profit, think seriously about hiring a business broker.
A broker will determine your business’ value, market it confidentially to serious buyers, screen interested parties, negotiate the details, handle the paperwork and more.
Your broker can also connect you with an accountant and attorney.
3. Go Through a Business Valuation.
Using the records you gathered in step one and measuring against market trends, your business broker will determine the estimated value of your business.
This will help set realistic expectations, so you can list your business at a fair price.
4. List and Market Your Business.
Your business broker will assist you in preparing a comprehensive listing that speaks to the business’ strengths and potential.
In most cases, you will want to keep the fact that your business is up for sale under wraps.
Your broker will maintain confidentiality as they market your listing to their pre-existing network of potential buyers.
5. Screen Potential Buyers.
As parties express interest in your business, your broker will screen them to narrow down the pool.
At this stage, potential buyers should sign confidentiality agreements before learning any sensitive information about your business. They should also provide proof that they have the financial means to follow through with a sale.
Once you’ve found the perfect buyer, it’s time to negotiate sales price and payment terms. Your broker will steer toward a deal that secures the highest possible price while still satisfying both parties.
At this point, you will provide access to your business’ financial and operational records for the buyer’s due diligence process.
Your broker will loop in an attorney to draft a contract.
7. Seal the Deal.
With the assistance of your business broker and attorney, you will review and sign all relevant paperwork.
You’ll work with your employees and the buyer to ensure a smooth transfer of all assets, client relationships and contracts.
As the business exchanges hands, you should consult with an accountant to understand how to best manage the sale proceeds when filing your taxes.
Request a Free Consultation
Looking for a certified business broker in or around Los Angeles, the San Fernando Valley or Santa Barbara? Contact The Valley Business Broker at (818) 625-2713 or thevalleybusinessbroker.com/contact-us/ for a free consultation.
About The Valley Business Broker
Steve Barnett has broad-based experience in small to middle market advisory activities. Prior to becoming a business broker, he served as CFO, controller and VP finance of both manufacturing and professional service companies with expertise in the aerospace, consumer products, banking and staffing industries. Known as “The Valley Business Broker,” Barnett serves most of Southern California, including Los Angeles and Ventura counties. Learn more at www.thevalleybusinessbroker.com.