The process of selling a business
Selling a business is as common as starting a business. In order to create an effective business, you need to follow a certain technology. As advised by Website Closers, for an online business for sale, it is advisable to adhere to certain rules and knows the features and nuances that can be encountered at each stage of the process. This article will help with selling a business.
Steps to selling your business
1. Preparation of the business
If you have come to the decision “I want to sell my company”, the first thing you need to do in the process for selling a company is to adequately evaluate the business and show it to the buyer from the best side, without distorting or hiding information. The preparation includes a legal audit, company valuation, as well as the creation of a small presentation describing the current situation in your business and its strengths. You should interest the potential buyer as much as possible but remember; all information in the presentation must be supported by figures and facts. Sometimes an objective assessment of the company is a certain difficulty for its owner; in this case, it is recommended to seek help from professionals. They have the necessary knowledge and competencies; in addition, they will approach the task with a “cold mind”, as they have no personal interest.
2. Financial reporting
One of the main steps to selling a business is to collect all financial statements. Business is money, and money loves an account. That is why your first companion when preparing for the sale is the profit and loss statement. It will show both you and the potential buyer where the money spent in the company and how its earned.
It is not enough to prepare a report for the year; the period should be longer to be able to assess the seasonality and dynamics of profits.
Ideally, you also need a cash flow statement to make it clear when and where the money comes from; when, and what it is spent on.
3. Search for buyers
The search can be conducted simultaneously through several channels. A great place to begin is on platforms like Businesses 4 Sale. Platforms like this maximize your ad exposure and deliver precise and targeted promotions to an extensive range of potential buyers. However, there are some aspects you must consider before you decide what approach you want to take. If you do not wish to hide information about the sale of the company from employees and partners, you can act openly. But keep in mind: an open sale can cause serious damage to the business; as it will cause concern among staff, suppliers, and creditors. As a result, there is a very high probability of labor conflicts, a decrease in the selling price of the company; and even business collapse.
But if you are not afraid of this, then first check your counterparties – often the buyers of the business are its customers, suppliers, or even competitors. This category of potential buyers is well-versed in business, knows its nuances; and clearly understands what benefits the purchase can bring.
But when selling a business to competitors, the seller should be very careful and cautious; – there is a high probability that the buyer will try to use the information he needs and, having received it, will cancel the transaction.
Another very effective option during the selling a company process in the open is placing ads on various public resources. Ads for the sale of medium and small companies can also be placed on online boards. You can publish ads in business magazines – some of them provide such an opportunity. Another platform is social networks: they are suitable for ads for the sale of small businesses.
If you do not want to sell your business openly, you can use the services of business brokers.
4. Registration and implementation of the business sale transaction
Again, the complexity of this stage depends on the scale of the business. The sale of a small business is usually carried out according to a simplified scheme. It is enough to draw up a business sale and purchase agreement; and an act of acceptance and transfer of assets.
The business sale and purchase agreement specify all the terms of sale; including its value, as well as the obligations of each party. In the act of acceptance and transfer of assets, all business assets are recorded: both tangible and intangible.
In general, in fact, the business sale and purchase agreement set out the seller’s obligations to transfer all business assets to the buyer and the buyer’s obligations to pay for the purchased business. As a rule, the sale of a small business carried out for cash upon execution of the relevant receipts for the receipt of money by one individual (the seller of the business) from another individual (the buyer of the business).
Another feature of the sale of a small business is that most often there is no re-registration of a legal entity. The buyer of the business uses its own legal entity. Its simply stated in the business sale and purchase agreement that the seller must perform the necessary actions to transfer assets within a certain period of time. For example, it may be re-registration of the lease agreement to the buyer’s legal entity, change of the website owner, etc.
When selling a medium and even more so a large business, the transaction can be a much more complicated process. The principles are the same, but it can take much more time.
So, in this article, we have considered all the main stages of selling a business. Now you know the answer to the question: “How do I sell a business?”. If you take into account the nuances that may arise at each stage, as well as follow the tips and recommendations given here, the owner of the company can quickly and profitably sell his business.