Every business owner knows that there will come a time to exit the business. You might be getting ready to retire,or changing life circumstances make it time to move on from your company. Whatever your reason for selling your business, you’ll need some advice and help in planning before you put it on the market for sale. Here are the professionals who can help you gather the information you need.
A Business Intermediary
Once you move from just thinking about selling to serious consideration, we recommend that you contact a business intermediary. An experienced Business Broker, or M&A Advisor can help you get a feel for the current market for your company, explain the sales process and typical timeline, and give you an opinion of value for your business.
Typically, business intermediaries don’t charge for these services and general advice (though they may if you ask for a formal valuation.) Their input can be very beneficial as you determine the right time to sell and whether your company’s sale will meet your financial goals.
If the probable sale price doesn’t match your expectation, you might also get advice on what will increase its value and the pool of potential buyers.
Your Financial Planner
Once you have an idea of your company’s current market value, you’ll need to decide if it’s enough for you to retire and support your lifestyle. Your financial planner can help you understand how much you’ll need to make from the sale based on your financial/lifestyle goals, current savings, and the tax implications of the sale.
You might need to wait a few years in order to build up your savings and investments. You might need to develop the company’s value by modernization, process improvements, or investments in equipment and other assets. Your financial goals and retirement plan will help you make decisions about how long you’ll need to stay in the company and how much you’re willing to invest.
Your CPA
Your accountant is an important partner in your business and can be invaluable as you get ready to sell. They keep your books organized, prepare your tax returns, and see how and where you’re spending money. They know how profitable you are currently and may have insight into how you can become more profitable. They can also suggest tax mitigation strategies you can employ after the sale.
Buyers will want to see books that are well organized and transparent, so your CPA can help you make sure your financial statements have all the information a potential buyer will need to see. They can also help you reclassify or reduce expenses to maximize the company’s cash flow – an important factor in the company’s total value.
Your Attorney
Your attorney will help you with estate planning and give you advice on how to protect your assets. Your attorney will also be essential in structuring the sale, reviewing documents, negotiating, and navigating any legal considerations that come up during and after the deal.
Business Improvement Consultants
If a business intermediary has suggested ways to improve your business, you may decide to spend some time working on your company to increase its value. For instance, you might consider hiring a professional salesperson, so the company’s sales aren’t entirely reliant on the owner’s relationships. Hiring and training a management team will also make prospective buyers more willing to consider a deal. Again, any change that makes the business less dependent on the current owner makes the company a more attractive target for a new owner.
Reducing inventory or facility size, improving operational efficiency, or acquiring certifications can increase the profitability of your business while you still own it. These improvements also have the benefit of making the company more valuable and attractive to potential buyers.
As you decide whether to make changes to your company, consider that it may take time – sometimes years – to break even on the investments. But if your timeline is long enough, you can see significant returns in a higher valuation of your company and higher multiples when you’re ready to sell.
The decision to sell is a very personal one, but you don’t have to make it alone. Your team of professional advisors can give you confidence and help you craft a plan that allows you to achieve both your financial and personal goals.
