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What You Must Do Before Selling Your Business

Posted by Lance Langenhoven on July 17, 2014
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Some people could never imagine selling their business. Other people started a business with the sole intent of eventually making it profitable as an item for sale. Either way, if you know you’ll be selling your business in the future, there are a number of matters you need to handle first. As with any other product, just because you like your business and think highly of it, doesn’t mean others will simply be lining up to make offers. Handle the following elements, however, and you’ll be able to sell your business and maximize profit.

Consider Employees

Like we mentioned above, chances are you may think your business is just fine. Hopefully, you’ve even enjoyed a healthy salary from it over the years. That doesn’t mean that a potential buyer is going to see things that way though. In fact, you’re more than likely taking a number of factors for granted.

You need to decide what employment contracts would transfer in the case of a sale, unless you’re simply hoping to sell the infrastructure and physical products of your company and little else. Few buyers will be interested if they know they’ll need to do a lot of rehiring and/or compete against former executives who may jump ship.

Get Your Records in Order 

Another thing your potential buyers will demand to see is any and all records as well as other important documents. Here, too, you may be taking for granted that these things are all in order simply because they make sense to you. Will potential buyers be able to say the same? The more work they have to do in order to make sense of your records, the less likely they’ll be to buy your business. You want as few hurdles as possible between their interest and them signing papers at an ideal price.

When it comes to your records, one simple step you can take is simply having a reputable CPA firm audit them for you. This will not only help get them in order, but, so long as you pick a respected company, will also help put a buyer’s mind at ease.

Handling Intellectual Property

Most companies have at least some form of intellectual property involved in their operations. It might just be a logo, the name or your sales copy. Whatever the case, you need to consider which elements you’ll be including in the sale. If you’ve patented some new technology, you might wish to maintain ownership over it.

Consider taking on the services of an intellectual property attorney who can help smooth out any and all wrinkles where this area is involved. Once said attorney helps here, be sure you’re upfront with any potential buyers about how your intellectual property is being handled. Negotiations can break down quickly if they find out that intellectual property they wanted isn’t part of the deal.

Think about Splitting It Up

So long as the company is under your ownership, splitting it up may be the last thing you want to do. However, when it comes time to put it on the market, dividing up the company into separate lines of business may be your best option for attracting buyers and getting the best price in return.

A buyer who wants your whole company or the majority of it can still make an offer to secure it. However, some smaller companies may only want certain aspects of your business. Not only does this have the potential of bringing in more money, it could also mean you get to sell off your entire business much quicker too.

Keep in mind that with this option, you could also retain part of the business as well if you choose to. Perhaps you’re selling the company because you want to retire or are otherwise sick of the hours. By keeping a single portion, you could cut down on your overall work, but still keep money coming in.

Hire a Company to Handle the Sale for You

Even with the help of the above advice, you may be thinking that this whole process sounds like more work than it’s worth. Or, you may still wish to sell, but you’re setting yourself up take far less than it’s worth because you don’t have the time or energy to follow all the steps or otherwise see this process through the way you should.

This is why many in your position simply hire a third party to handle the sale of their company for them. Pick the right one and you’ll have someone who will not only be able to handle the above for you, but also knows the market. This means they already be in contact with companies or people who would buy your business.

Having someone else take care of the sale for you also preserves your anonymity. Keeping your sale a private matter can protect your bottom line and often makes hiring a third party worth it all by itself.

Although this may seem like a lot of work, you may not be able to sell your company without doing it. Plus, even if you do sell it, without covering the above, you won’t get nearly the money you could.

Source:

http://www.seattlebusinessmag.com/business-corners/manufacturing/10-things-do-selling-your-business

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