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Steps to Follow to Sell a Business Fast
Once the business owner decides to put the business for sale, he/ she will definitely aim for a high earning from it and lessen the effect on the employees who assisted the owner in expanding the business.
So how can the owner facilitate the sale? As per Matt Kelly, North Point’s managing director, the best thing that can help business owners close the deal is to be transparent on the objectives of the transaction. Some owners would want to turn over the whole business to the new owner and enjoy his profit and time after. But others will just put a portion of the business on sale and will still want to be involved in the operations.
To prepare the business for sale, current owners must be open about the flaws of the company. As interested buyers go through the details and documents of the business, they might find questionable issues. Owners must be ready to answer questions regarding the matter. Otherwise, buyers might just decide to take other better options.
You should also consult an accountant to identify tax implications of the sale. He/she will also be a big help in deciding what type of sale should you facilitate (asset or share). Form affiliations with other professionals that may assist you on the transaction as well, like a lawyer and a broker.
Of course, before proceeding to the real stuff, you must be able to build your business and prepare it for the actual sale. Reduce expenses, get rid of customers deemed unprofitable – these will set your business value higher. Prepare necessary financial documents and sales performance reports. Make sure your books are clean and accurate.
Apart from the mentioned action plans, below are the concrete steps that an owner should take once he puts his business on sale:
- Draft a brief summary of the business
Ask a professional to write an overview of the business which can answer the usual inquiries of interested buyers. It’s advisable to hire someone else to do this for you to avoid putting biases and disclose sensitive details of the business.
- Do an aggressive promotion for your business
In the business overview, you must be able to identify qualifications of a potential buyer of your business. From there, you would know which means of advertisements should be maximized. Create a plan on how to reach these potential buyers. Here are some suggestions:
- Directly reach them through phone calls, emails, or fax. – This will require you to have a list of potential buyers and their corresponding contact details. Another party should be doing this for you in order to preserve your confidentiality.
- Put up advertisements for your business that will attract the attention of your targeted industry. – Advertisements are placed on trade publications and other media that specifically targets your industry. This is rarely done by brokers because of the high cost and possibly low payment from buyers. But this is effective for certain businesses that are eyeing buyers with specific qualification/ experience/ skill set required (i.e. medicine, law).
- It also pays to get the attention of buyers outside your targeted sector. – You may tap popular online marketplaces to post listing/s for your business, if you’re eyeing younger people to purchase your business. The identified site features plenty of business listings in different countries like US, Canada, and Singapore. Over 2,000 listings can be found at present on the site for businesses located in Canada. 150 of which come from Calgary (to know more about them, just type “Calgary business for sale” on the search engine); balance are located in other main provinces of Canada. Some sellers still post business ads on newspapers but this is already rarely practiced.
- Select qualified buyers and send them your selling memorandum.
Avoid making the common mistake done by most sellers of not shortlisting the interested buyers. Send them an email, stating more information about the business. The email will be the venue for the buyers to relay their concerns and questions about the business. Through the email, you may also require the buyers to sign a nondisclosure agreement before providing them copies of the business summary. This step will further deduce the list; buyers who are not serious will most likely ignore the agreement form that needs to be signed.
- Set an appointment with the buyers
After sending the email, it’s advisable to make one call to reiterate what has been said in the email. Wait for the buyers to make the succeeding calls; there’s no need for you to chase them. If they are highly interested in your business, they will be the ones to do follow-through’s. If buyers have a lot of questions regarding the business, it’s best to schedule a meet-up to make a further discussion about the business.
- Take an offer
Require the buyer/s to make an offer. But even before the negotiations, make sure that the qualified buyer/s is/ are financially capable to cover the offer. Acceptance of the offer will lead to due diligence wherein you can investigate a bit about the buyer’s background. During this time, you should know the buyer’s expectations, as well as possible pitfalls that may be encountered along the way.
- Facilitate the process of due diligence
Prepare a checklist of the process. As mentioned, this is the time for you to scrutinize the ability to finance the business and make it grow further.
- Close the deal
Closing of the sale is still a process, just like due diligence. Continue to organize documents, prepare checklists, and set timelines. It’s best if you hire someone to assist you in the closing of the sale, if you’re not experienced enough to facilitate it yourself.