How to Sell Your Business

Make a Decision Based on the Best Financial Outcome

There are several situations that might cause a company to consider selling their business. There might be some internal issues that are preventing partners or associates from agreeing on a future path, and thus selling the business is the most profitable and practical solution. Other businesses might be at the pinnacle of their value and offer the greatest return on investment for short-term investors. Whatever the reason for selling, ensuring the best outcome depends on how the sale is approached.

Determine a Realistic Sales Price

The first step is to determine a realistic selling price that is fair to the owner but will not scare away any potential buyers. This figure can be based on the value of the company's assets and its standing in the community and the potential for growth. Finding selling prices for similar companies is also a good way to get a feel for a proper price range. If the company is a partnership, the selling price must be enough to repay all of the partner’s initial investment as well as a reasonable profit. Sole proprietors must determine an amount for the selling price that reasonably repays all of the time and desire they have invested in the business, understanding that potential buyers might not share the same sense of value.

Prepare Your Business to Be Sales Ready

Another important step is to prepare the business for the sale by making sure that the premises is in clean operating condition at all times. Recasting any non-vital operating expenditures back into the profit column is also a perfectly legitimate method to improve the operating numbers of the business. Recasting figures is a good method of improving the potential of the business by removing expenses that the potential buyer might not plan on expensing either. After the business is ready, advertising the business sale is a good way to attract potential buyers, such as in:

• trade publications,
• newspapers, and
• business sales websites.

Business brokers are also something that should be considered depending on the type of business.

Negotiate All of the Details and Put It in Writing

The final stage is negotiating terms of the sale. This includes all of the assets that will be included or excluded from the deal and any contracts the buyer will be assuming along with the business. A sales agreement is drafted and the time of closing is set. After the final closing, all appropriate paperwork must be filed with the IRS and any appropriate local or state agencies.