Eight things to consider if you are selling your business

What should you do when you have made every effort to build your business but you start thinking about your exit strategy?

There are plenty of options available. You could turn it into a family business, get someone else in to run it whilst you reap the benefits of your hard work or flog it to the highest bidder.  Our resident business woman and entrepreneur, Sarah Green has put together a list of eight things to consider if you decide to sell.

  1.  Create a sales document about your business – this will flush out who you could market it to and exactly what you have to sell.  You can get a good template here.
  2. Settle on a realistic valuation – the figure that is bandied about is a multiple of 3 – 5x your net profit.
  3. Share sale vs asset sale – you need to decide what you want to sell.  Do you want to sell the entire company ie assets, liabilities and obligations (share sale) or do you want to sell the company’s assets e.g. databases, brand, customers and keep the liabilities (asset sale?).  This clarification might help you decide.
  4. Evaluate whether you can manage the sale yourself – this could save you a considerable amount of money.  However, selling your business is like selling a house – it will take time and skill.  If you know a trustworthy business broker they can get it to market quicker than you unless you have previous experience.
  5. Find a business broker you can trust. You will want to find someone who you can enjoy working with, is a killer negotiator and knows their industry well.  Ask your network if they can recommend anyone.
  6. Decide on the type of deal – will you want to completely exit from the business as soon as you have sold or whether it will be gradual over a period of time?
  7. Check your legal documentation is up to date. I’m sure many small business owners who run limited companies are the same – their official documentation needs a spring clean.  Did you remember to document all those important decisions in your articles of association?
  8. Find a buyer that you can have a good relationship with – you will be working together for a while so this is imperative.

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