As of December 2020, there were 1.22 million employer businesses in Canada. Of these, 97.9 percent were small businesses, 1.9 percent were medium-sized businesses and 0.2 percent were large businesses.
Businesses are always being bought and sold. Every year, over 10,000 businesses are sold in the United States. The reasons for selling your business may be that you’re looking to retire, that you want to unlock your assets, or that you want to embark on a new challenge in your life.
Whatever the reason prompting you to sell your business, you need to understand the process involved. Knowing how to sell your business will help ensure the transaction goes smoothly and the business sells for the right amount.
So, if you’re looking at how to sell your business fast, where should you start?
In this guide, we’ll talk you through the processes involved and share some expert tips for selling your business.
Create an Exit Strategy
Ideally, you’ll want to plan your exit well in advance. It can often take two years to sell a business. This means, if you’re looking for a route out, you need to start the process early.
Organize Your Documents
The first thing you should do is to get your finances and paperwork in order. Most serious buyers will want to carry out due diligence ahead of such a major purchase.
Prepare your financial statements and tax return documents for the previous three years and find all paperwork relating to leases and assets.
In addition to getting your house in order on paper, this will be an opportune time to make sure your business premises are presentable and that all equipment is in full working order.
Increase Your Sales
To ensure your business is viable, you may need to boost your sales ahead of the sale. The key metrics to improve will be overall sales and gross profit. The bigger the recent sales growth, the more attractive your business will be.
Is your business exit ready?
If you’re planning to exit your company in the near future, you may find EastWind’s Exit Strategy Playbook helpful in developing your own exit strategy, making your company more sellable.
Get Your Business Valued
When selling a business, you’ll need to know its true value. Hire an independent expert to determine its current value, and use this as a guide price when marketing the sale.
Having an expert to carry out the valuation will provide credibility to the sale price.
Hire a Merger and Acquisition Advisor
While you may be an expert at running your business, selling it is a different challenge. Hiring an M&A advisor is one of the most important steps you should take in the sales process.
An M&A advisor will ensure your business sells for the highest price and will save you a considerable amount of time and energy by managing all aspects of marketing the company. An M&A advisor will also often court several interested parties so that you have healthy options.
Create Contracts and Engage a Lawyer
Finally, you’ll need to make sure a sale is legally binding and watertight. Hiring a lawyer to draw up contracts will ensure this is the case. At all stages of the process, you need to be aware of the legal processes involved in selling a company.
Don’t Allow Emotions to Cloud Your Judgement
You’ve no doubt worked hard to get your business where it is, and parting with it can be difficult. All too often, emotions cloud the judgment of invested business owners to the point that they miss out on the best opportunities.
Taking a pragmatic stance and listening to the advice of your M&A advisor will ensure you get the best deal.
How to Sell Your Business
To gain a full understanding of how to sell your business, speak to an M&A advisor. Forward planning and a realistic outlook are important if you’re to attain the true value of your business.