It is essential to consider all the details when deciding to sell your business. The process can be lengthy, expensive and emotionally draining. It also involves the transfer and ownership of assets which require a lot documentation.
Generally speaking, the size of a business determines whether it will be sold on its own or through the broker. Smaller companies are typically sold through brokers since they are more restricted in their buyer pool. Selling your company can be a complex process that requires planning and preparation.
An appraiser with experience can provide a detailed appraisal report that includes evidence to determine the value of your business. The value is usually determined by a multiple of the annual net income or revenue. This number will vary by the type of business and industry, and is the basis for determining your selling price.
Before selling, ensure your financial information is in order and your inventory of equipment is up to date. You’ll need to create, on average three years worth of tax returns and financial statements for a potential buyer to review. These documents will speed up the sale process.
During the negotiation phase, buyers can ask for different conditions to be included in the sale agreement. Salary guarantees, stock payouts or ownership stakes, and other conditions are all common requests. Before committing to any agreement, you might want to speak with an lawyer or accountant to explain how the provisions will impact your earnings.
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