There are many steps to successfully selling a small business. The steps are the same whether or not you are selling the business with the help of a business broker or if you are selling your business yourself.
You must always be aware of the “privacy” issue when selling a business. You do not want your employees, vendors, bankers, or customers to know your selling because once the word gets out, Financial damage can be done to your business. To maintain the confidentiality of the deal, start with a well written tailored non-disclosure agreement.
This will be used before releasing critical information to a possible buyer.
Prepare for the Sale
After you have set your objectives, the next step is to prepare your business for sale. This means making sure your profits are up, your expenses are down and your accounting records are all in good order.
Next, you will want to have an advisor prepare a business valuation, so you have an understanding of the fair market value of your business. You might then sign a listing agreement with a broker or decide to sell the business with your own team of hand-picked advisors. This team will include your CPA, financial advisor, and your attorney.
Either way, the next step is to create an offering memorandum. This memorandum is essentially a 20-page report on your business, including things such as the history of the business, product offerings, and historical financial data.
Marketing the Business
The business then needs to very privately be advertised in the newspaper or on one of the more popular buyer websites. This will bring interested buyers out of the woodwork and allow you to have the non-disclosure signed and the business report read.
Buyer – Seller Meeting
If a buyer reads the information on your company and is interested in talking further, you will then need to conduct a buyer/seller meeting. The first meeting will be mostly made up of questions and answers. Both buyer and seller will be interviewing each other.
If the buyer is still interested after the buyer-seller meeting, then an offer may be presented. This offer will begin the negotiation process. In negotiations, you may go back and forth five to 20 times on many important issues before a deal is actually struck.
Once you have an agreement and all important details are spelled out on the letter of intent and that document is signed by both parties, then buyer and seller can each go to their attorneys and discuss which attorney is going to prepare the closing documents including the purchase agreement and the bill of sale.
RPR Associates offer both affordable business brokerage services that get results.