Selling a business can be stressful and time-consuming. Whatever the reason for selling, the steps to be taken ahead of time are the same across the board. We’ve compiled a checklist to make your transition a smooth one!
Timing: First, figure out your timeline. It’s good to start preparing as much as five years in advance of the sale. This gives you time to increase your EBITDA margin and make the business look attractive to prospective buyers.
Implement processes: The company is going to have to be able to function without you, so start establishing processes now. Buyers won’t want to come into a company that isn’t running smoothly, so assess which processes need fine-tuning ahead of time.
Business valuation: You’ll want to know how much your business is worth before finalizing a price. You can certainly use one of the many formulas, like EBITDA, to find this answer, or you can make an appointment with a business advisor.
Prepare a Due Diligence Packet. Start preparing this packet years in advance—it includes important documents and data that will be presented to a perspective buyer and should be updated at the end of each year. This should include documents about insurance, technology systems, tax information, and permits, to name a few.
Find a broker: While many business owners dislike the idea of a broker’s commission, hiring a broker can be a better alternative to selling on your own. With someone else handling the sale, you’ll have time to complete the other necessary preparations and keep working on the business.
Pre-qualify the buyer: Ask potential buyers for financial statements to prove that they have the capital for a down payment. Allow some room for negotiation, but make sure the agreed upon price is reasonable.
Once the price has been settled, get all agreements in writing.
Prep the team: Don’t leave your employees in the dark. Have a meeting where your team members can have all their questions answered.
The experienced fractional executives at Growth Point Partnership are ready to step in and help prepare your business for sale!