How to Sell a Business Successfully With the Help of a Business Sale Consultant
What is a business buyer looking for when reviewing a seller’s financials?
Clean financials and a solid EBITDA (Earnings before interest, taxes, depreciation, and amortization). Business buyers are attracted to businesses within healthy industries that have the greatest potential for growth.
What are the best ways to improve a business’s market value and how to sell a business?
Before selling a business, it’s wise to spend time maximizing it’s value. The following list will give owners a running start on, what can be, a labor-intensive task.
- Standardize and document all company procedures
- Eliminate liabilities or liens and resolve any outstanding litigation
- Investigate transferability of leases and sales/supplier contracts
- Perform maintenance on company equipment to ensure good operating condition
- Secure key employees with employment contracts
- Eliminate under-performing employees from payroll
- Equip management team with the skills and knowledge to operate without current ownership
- Minimize reliance on a few big customers for a majority of sales
- Freshen-up and clean the business facility
- Complete a thorough exit plan
- Have clean, verifiable financial statements (for the past three years) ready for review.
What are 5 ways to improve cash flow?
- Reduce excess inventory
- Collect on any outstanding receivables
- Re-negotiate key supply contracts to include more favorable terms
- Eliminate/reduce personal expenses on your income statements
- Ensure financial controls are establishes and adhered to
Do you know what legally needs to be disclosed to potential business buyers?
This question is more rhetorical…designed to get you thinking. There is not some magical list a seller checks off to make sure they’ve disclosed all the right information, but there should be. Business Sellers with the best of intentions can innocently fail to disclose everything pertinent to running a business and find themselves in court when things go wrong for the new owner.
To alleviate this, error on the side of disclosing too much. If there are unattractive or troubling aspects to the business, be up-front about them. Take the initiative to disclose the situations (and how they are being resolved) before the prospective buyer has to pull it out of you.
Part of The Business Sale Advisers process when assisting with pre-sale preparation is to guide an owner through properly disclosing all the warts of a business. What you say, how and when you say it, all impact the impression of the buyer.
How to sell a business and prepare for tax liabilities?
Many businesses file their tax returns after taking full advantage of opportunities to minimize the taxes they must pay. Within the limits of the law, much can be written-off to reduce a business’s profitability which, in turn, reduces the amount a company pays in taxes. This is great, until it’s time to sell a business. Then, the opposite needs to happen…profitability needs to be maximized so an owner can achieve a higher selling price. This is a common situation for business owners.
To alleviate this problem, business owners should begin preparing a business for sale at least three years in advance. This will give them three years of historical tax filings that were prepared using accounting practices that maximize business profitability and business value .
How to sell a business successfully taking several years to prepare a business for sale.
To properly sell a business for the maximum possible price, a business owner should begin preparing a business for sale three to five years in advance of the desired close date.
It is most wise, however, to always be working towards maximizing efficiency and improving the various business aspects listed above. Ideally, an owner will cash in on their hard-work at some point and have planned in advance for selling their business but, unforeseen events (poor health, divorce, etc.) can quickly alter an owner’s original intentions. American Fortune Business Sale Consultants recommends that businesses maintain business exit plans and regularly review cash flow and market value factors.
Why pay 10-12% commissions to business merger & acquisition advisers to sell your business. Contact American Fortune Business Sale Consultants for help and experience low prices and superior expertise and support.
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