Mastering the Art of Selling Your Business: A Proactive Guide to Getting the Best Deal

If you're thinking about selling your business, there are a few key questions you might ask yourself. For example, are you going to keep any assets? How will family contracts like property leases be dealt with? And do you want to sell the business outright or just its assets?

To answer these, you'll need a team of experts in finance, tax, accounting, and law to gather and study information about your company. This information helps your team understand things like how much your business is worth, its financial and operational performance, any legal risks, and other possible issues.

It's best to start this process early. The person who wants to buy your business will need this information too. Some people wait until the buyer asks for this information, but that's not a good idea. If you start early, you can sort out any problems with your business. This could help you get a better price, have more power in negotiations, and make the sale go more smoothly.

When your company is ready, it's time to find buyers. With the help of a financial expert, you can decide who might be interested in buying your business. You then send these potential buyers a brief summary of your business, without revealing your identity. If they're interested, they'll ask for more information. You then agree to keep each other's information secret so you can share more about your business without losing any advantages.

Potential buyers will then make non-binding offers, usually with a price range and other key details about the possible sale. You can meet with their management teams to learn more about them before moving forward with the sale.

In the best-case scenario, several buyers will be interested, creating a bidding war. This can help you get the best price. Once you've chosen a buyer, you start working towards a deal. First, you agree on a Letter of Intent (LOI), which outlines the proposed sale. If there are multiple buyers, you can compare their LOIs to choose the best one. Once the LOI is signed, the buyer has the exclusive right to negotiate with you for a while.

The buyer will continue to study your business to understand it better and assess any risks. What they find can affect their negotiation power and how they might want to change the deal. If you've done your homework as suggested, there shouldn't be any big surprises or changes to the terms in the LOI.

Next, you and the buyer agree on the final details of the sale, including promises made by both sides, compensation for any losses, and conditions for closing the sale. Ideally, these were all included in the LOI to make negotiations easier. After the final agreement is signed, there's usually a short time to meet or waive these conditions before the sale is complete.

Selling a business is a long, complicated process. To get the best deal with the least stress, start early, assemble a team of experts, and prepare your company for sale in a thoughtful, proactive way.