Selling a business is a whole lot more than deciding on a price and getting a buyer. Business owners are advised to consider how they want to approach the sale carefully. Choosing to sell to someone already involved in the business or an external party will require different approaches in dealing with the sale.
Here are some key considerations when navigating the sale of your business:
Choosing the buyer rather than the price
If the purchaser is an insider, such as a family member or a member of the business’s management, you likely won’t get as high a price as when selling to an external buyer. The type of purchaser will affect the asking price as well as how much cash will be available, and how much will be deferred.
However, in most cases, when selling a business to an insider, the ongoing management is less disrupted than when selling to someone unconnected to the company. In contrast, selling to an outsider could bring several offers from various interested parties and different offers to consider.
Being irreplaceable can affect the offer
When an external party shows interest in a business, the ability to take over a functioning business without too much disruption will make it a more attractive option. If, as the seller, you are an integral part of the company, finding a buyer might be more difficult. Therefore, empowering staff to take over your duties after the sale could positively impact a potential purchaser.
Do not be impatient
Selling a business is a complicated transaction, and trying to rush things could negatively impact the buyer. Show understanding when a purchaser has to deal with investors, lenders and other manners of funding the transaction.
Work closely with investors and lenders
Being forthcoming with information and documentation during the purchaser’s due diligence process could be beneficial. Similarly, it’s important to provide all the information requested by financiers.
If you’re considering selling your business, it would be worthwhile to seek professional legal advisers instead of tackling the complicated process independently. Ignorance and inexperience are not unusual in such transactions, and some errors cannot be fixed after the fact.