Some people start a business with the specific intention of selling it to others in the future. Someone might develop a home health care practice and then sell it to a larger medical business once the organization has a positive reputation with the community.
Other times, a change in marital status, health complications or a new passion project may inspire someone to liquidate their business holdings. Selling a business can leave an owner with capital for their retirement or their next business endeavor.
What steps does a business owner generally need to take if they want to maximize the return on the investments they have made in their company thus far?
Identifying and correcting liability
Any investor seeking to acquire an ownership interest in a business has to perform their due diligence. They look over a company’s financial records and resources to determine what risks they have to absorb if they acquire the company. The current owner can help eliminate many factors that might deter prospective buyers. They can pay off loans, repair damaged equipment or renegotiate arrangements with employees who play key roles at the company. By addressing factors ranging from financial obligations to Talent retention ahead of time, the current owner of a business can pave the way for the new owner to quickly and comfortably take possession of the business.
Establishing a realistic fair market value
Every professional looking at an organization could have a slightly different idea about what the company is worth. Factors ranging from the value of equipment and facilities to the contracts that the company has with different vendors and customers can influence how profitable the organization is and what the company is worth on the open market. Conducting an appropriate business valuation can help business owners ask for a reasonable price that doesn’t scare away investors or put the company at risk in the future.
Identifying perspective buyers
There are often major players in different market niches who may have an immediate interest in the acquisition of a particular business. Perhaps a competitor has long expressed an interest in a company’s secret recipe. Maybe a national company has made small forays into the local market but has yet to establish a toehold. It is frequently a smart move for business owners to identify prospective buyers ahead of time. They can pitch the business sales to a limited pool of prospective buyers before attempting to list the company for sale on the open market. Doing so could substantially speed up the transaction and prevent any reputation damage that might come from listing the business for sale in a public manner.
Having knowledgeable support when preparing to sell a business may allow people to optimize what they receive for the acquisition of one of their most valuable assets. Those who plan ahead of time are in a better position to secure the maximum value when they sell a company.