By Jeff Swiggett

Whether it be moving on to a different venture or going into retirement, business owners choose to sell a company for various reasons. If you own a business and think it’s time to consider selling your business, you may be wondering what are the best practices to follow to get your business ready for a successful sale.

Below are five tips to help get you and your business ready for a successful sale.

1. Determine the Value of Your Business Through Financial Analysis

To sell a business no matter what industry you are in, you need to know how much your company is worth. However, it can be difficult to assess your business’ value without knowing the financial tools necessary to calculate it.

There are six main areas to look at when you are trying to determine the value of your company:

  1. The strength and depth of your management team
  2. The quality of your financial controls
  3. The depth and quality of your customer base
  4. The end markets your business operates in
  5. The various competitive threats to your business
  6. Risks to your vendors and suppliers

By analyzing these six factors, you will be able to calculate the value of your business. You should also take into account your business model’s sustainability, its potential future growth, and brand reputation in order to effectively market to those looking to buy a company. This will help you put your company for sale for top dollar.

2. Plan Your Exit Strategy

When you put your business up for sale you want to make sure that you are leaving your company on a strong note. For this reason, it is crucial to have an exit strategy when you sell your company. One of the first and most important parts of your exit strategy should be to sort out any additional financials you need to prepare before your departure. This includes increasing sales right before the sale to boost your business value while you’re waiting to sell. This is known as optimizing the value of your business and will help make sure you get top dollar for your business.

On top of this, you will want to define the outcome goals of your sale. This can include how involved you want you stay in the business after its sale. Many business owners want to stay on in some capacity after the sale of their company to ensure its success in the future. Adding this desired role into the contract of the sale is a great way to make sure you can still be involved in the business after the sale, if this is something you desire.

Often business owners like to consult a professional business broker to help guide them through any potential hurdles they may encounter when trying to plan an exit strategy. This professional service can save you a lot of time and headache during the exit strategy phase of business sales and beyond.

3. Make Sure to Stay Business-Focused

Advertising a company for sale involves a great deal of work. You will need to identify potential buyers, pre-qualify these prospective owners for financial and management expertise, and clean up your activities in preparation for departure.

At the same time, you will have to run your business – and it’s in the best interest of your company to increase sales, build brand personality, and expand your customer base prior to selling. For a sole business owner, this can be an immense amount of work. This is another step where a professional business broker can be of immense help.

4. Try to Follow a Proven Structured Sales Process

Selling a business effectively and efficiently requires discipline and careful planning. Business brokers and top M&A firms often develop structured processes to streamline company sales. As a savvy business owner, it is a great idea to emulate what these professional business brokerage services do and follow a structured business sale process to make sure you are hitting all the right steps along the business sales road.

This 9-step sales process has proven to help sell businesses fast, and at the right price:

  1. Initial Meeting: Your broker will meet you at your business and discuss what to expect during the selling process, as well as what you hope to achieve with your business sale.
  2. Valuation: Your broker will perform a review of your business’s financial information and return a proposed selling price.
  3. Deal Team: Your broker will help you assemble a group of financial advisors to help your sale move forward smoothly and legally. This group will likely contain your accountant, your financial planner, and a transaction attorney.
  4. Buyer and Marketing: Your broker will identify what buyers to target as well as key marketing strategies for the business sale.
  5. Buyer Pre-Screening: Your broker will pre-qualify your potential buyers prior to negotiation by analyzing their financial strength and business history.
  6. Buyer/Seller Meeting: Your broker will set up your meetings with qualified buyers.
  7. Offer to Purchase: Your broker will help you negotiate potential offers and make recommendations based on their wealth of experience and the offers you receive.
  8. Due Diligence: After you’ve chosen a buyer, you enter a due diligence period. During this time, your broker will help you verify various business documents with the potential buyer and accept the final purchase agreement.
  9. Closing: Your broker will guide you through the purchase finalization so that you satisfy all legal requirements to sell your business, helping both you and the buyer.

5. Use a Professional Brokerage Service

Most people only sell a business once in their lives. In contrast, professional business brokers sell hundreds of businesses over the course of their careers. These professionals know what it takes to sell and to buy a business in CT and in other markets. Take advantage of the resources, years of experience, and insider knowledge of the market by hiring a brokerage firm. This will ensure that you follow all legal and financial requirements necessary to sell your business.

A professional business broker is a worthy investment if you are trying to sell your company. By hiring a mergers and acquisitions firm, you will invest in a wealth of experience, developed processes, and smart business strategies.