You’ve spent years growing and positioning your business to be successful. When it comes time to sell your business, you want to make sure that you are selling when and how you want and with money in hand. Below are some helpful tips to help you get the compensation you deserve for all that you have built:
Create an Exit Strategy and Timeline
Creating an exit plan involves making a proactive series of decisions. This involves writing down how much cash you will need to walk away with, what the favourable market conditions are for selling, what the lease conditions are (if any), outlining any tax implications, and creating the timeline required for a proper transition.
Also, it’s important to define the potential purchasers. It is important to know whether you are open to selling at arm’s length, to a competitor, to an employee, or to a family member. You may also want to consider if you will want any future relationship with the business, such as working as a consultant to the new owners.
Determine Market Value
Doing research on the current market you plan to sell your business in will help you better understand appropriate transaction timing and price targets. You should understand recent comparable sales in the area. Take into account not just the value of the business (income and inventory) but also real estate and assets like furniture and electronics. A professional business valuator will be able to accurately assess the value of your business.
Deal Structure
Now that you understand market factors, you will want to create an ideal deal structure – one that will ensure you receive the best price and conditions for the sale of your business. This includes outlining all the conditions of the sale, such as price points, employee retention plans, lease conditions that may be affected upon selling, and how the operation of the building will be maintained during and after the transition.
Preparing your Business for Sale
You should know when and how to enhance your business’ valuation and saleability. This could include brand perception, fixing any eyesores, getting your balance sheets in tip-top shape, updating any contracts with customers and vendors, as well as outlining any deal killers and, of course, addressing them immediately.
The Marketing Plan
Engage in a marketing plan and research marketing companies that can aid you in attracting leads. Creating brochures, ads, and websites, will help draw in qualified purchasers. You may want to work with a business broker or use a listing service to increase your reach.
Negotiation Plan and Due Diligence
Be prepared to negotiate not only the price, but also the due diligence terms through the transaction process. Have an experienced broker or agent who can help aid this process and ensure the terms are in your favour. Know your price points and ensure you engage with a trusted purchaser with a quality covenant. In the interim it will be important to keep your sales figures up, expenses low, and your current operations adequately performing to ensure premium pricing.
When it’s time to sell, being prepared is essential. It can help you sell your property faster, at a higher price, and ensure a much smoother transition. The earlier you put your exit plan in place, the more options you will have. Meet with your financial advisor at The Beacon Group of Assante Financial Management Ltd. to customize the best tax, compensation, and succession plan for you.
