Selling your business is often a final step before retirement from your business or moving on to an even more exciting venture. This is never an easy process as your main motive while selling a business is to how to sell your business, to get the maximum value for your business and to find the right broker or buyer to sell your business. So, here are some of the few key points that one has to kept in mind while selling your business –
1. Splitting the Business
If you are the sole proprietor of a business, you won’t need to worry much about how to split your business. But if you are part of a partnership, LLC with the multiple owners or a corporation, you need to think about how you will be going to split the proceeds of your business sale. You also need to take care of the nature of the divide between the stakeholders, outlining ownership of each individual in terms of percentages.
2. Evaluation Purchase Price of the Business
While purchasing any business a business owner can and should evaluate cultural and strategic fit, contractual legal terms, speed, and certainty to close. Certainty to close of the business means that the buyer has been fully vetted to ensure they have the resources to close the deal. Evaluation of the business can be done on the basis of the revenue i.e. the business cash flow value, earnings before interest, taxes, depreciation, and amortization.
3. Preparing Sales Transaction
Before selling your business make sure that personnel, systems, reporting, and records are well maintained. By doing so this will increase the value of your business, attract more and more customers to your business and certainty that you get to close. It is highly recommended that you pay particularly close attention to your accounting systems and records and make sure that you will be able to produce timely and accurate income statements and balance sheets.
4. Hiring Good Advisor
Selling your business can be a full-time job when combined with running your business. If you hire a good accountant, a good M&A attorney, and a good investment banker it can significantly ease the brain damage of going through a transaction and allow you to focus the majority of your time on running your company. A good adviser always advises the clients to continue to do what is strategically right for their business and not alter the course based on the vagaries of the sale process. Minerva Equity is one of the best advisors that focus on the better liquidity option for selling your business.
5. Growth Prospects Drive Valuation
It is very important that your company continues to perform well during an M&A process and most crucial that you leave some gas in the tank in the form of growth for the next buyer. The more gas you leave in the tank the more likely you are to command a premium multiple of Earnings before interest, tax, depreciation, and amortization (EBITDA). Basically, EBITDA is a measure of a company operating performance which is a way to evaluate a company’s performance without having to factor in financing decisions, accounting decisions or tax environments.
So these are the five things that an entrepreneur has to keep in his/her mind while selling a business.
