After all the work, time, and energy you put into growing your small business, getting an offer to buy it is the ultimate validation.
According to CBC.com, if you were waiting for the right economic climate to sell your business at peak price, 2014 is it, which is good news for those eager to retire or cash out.
But how do you make sure you don’t get low-balled and how do you prepare to make the trade?
Here are seven recommendations.
Develop a target list of acquirers.
Think about likely candidates to buy your business long before you are ready to sell. According to the Fox Business Network, this helps you start thinking like a buyer. You also need to figure out what makes your business more valuable to potential buyers. Buyers tend to bid up businesses with industry leading profitability and a narrow range of competitors.
Protect your intellectual property.
Plan ahead. An attorney in Florida tells CNBC, “If you need to get a patent for something, that’s something you need to consider very early in the process. Spend the time trademarking your company name. Get copyright protection for whatever you are developing.”
Visit your accountant.
Before negotiating a deal with potential buyers, learn what types of transactions boost your tax obligations. Check with your accountant about the advantages of either selling the assets of your company or selling shares of your company stock.
Make sure the business isn’t dependent on you.
According to CNBC.com, a business that depends heavily on the presence of one person to succeed—can be very difficult to sell to another buyer. If your business relies less on the owner you get a higher selling price.
Prep your company for sale.
Business owners benefit when they have the opportunity to unload unprofitable customers, cut unnecessary expenses, and build up areas of perceived business value. That’s according to Fox Business News. They also advise to do everything possible to build consistency into your company’s financial and operating performance. Settle all tax obligations and filings before a potential buyer review.
Select your support team.
Find a solid law firm to represent your company during sale negotiations. If you decide to hire an investment banker to solicit buyers, make sure your intermediary has enough prestige and expertise to rep your company the right way. Sort through their options without any pressure to make fast decisions. You do not want to be rushed into the wrong decision.
Don’t keep secrets.
No buyer likes surprises. You should look into resolving any ongoing problems within the business in order to get the best selling price. According to CNBC, “The longer you wait, the more disappointed the buyer will be. The greater the likelihood you will spoil the deal.”
To find out more check out the CNBC article.