The first step towards successfully selling a business is finding a qualified merger and acquisitions advisor to work with. Then, sellers should also ask themselves several important questions. A recent article, “7 Questions to Answer Before Selling Your Business,” published by The Good Men Project, has a great overview of questions sellers should answer before moving forward.
Author Troy Lambert believes that at the top of the list is one very simple and powerful question: “Are you ready?” For example, one component in readiness is ensuring your financial reports and statements are ready to show a prospective buyer.
Next, you need to find the answer to the question, “What’s it worth?” Determining what a business is worth requires a professional business valuation. A great deal can go into evaluating your business and you need an expert to help you determine that value.
Third, Lambert believes prospective sellers should ask themselves, “How’s the health of my industry?” He emphasizes that honesty is key here for a variety of reasons. If your industry is in a transition period, for example, then it might be better to wait until a better time to sell.
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.
The fourth question on Lambert’s list is, “How long will it take?” You need to remember that selling a business can take a long time. Successfully selling your business may even mean that you must stay on and work with the new owner during a transition period.
You also need to be able to answer the question, “Who is my buyer?” You don’t want to waste a lot of time with potential buyers who are not a good fit. Finding the right buyer for your business helps to ensure that a deal will be finalized.
Sixth, Lambert wants sellers to think about how they will get paid. Are you willing to finance part of the deal? What about balloon payments over time? Understanding, before you put your business on the market, how you want to be paid and how flexible you can be in terms of payment is essential.
There are only six questions posed in Lambert’s article titled “7 Questions…” but these provide a good start at preparing you for the sale process! And, it’s worth being prepared. For most sellers, selling a business will stand as the largest financial decision of their lives. With this realization comes more than a little pressure.
Considering the enormity of the decision, having good advice is a must. A seasoned and experienced merger and acquisition advisor understands what it takes to buy and sell a business. Working with an M&A advisor is an easy and efficient way to begin the process of selling your business, and to find answers to these six questions and many more.
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