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Practical Wisdom: Everything You Need to Know

Business owners choose to sell their business when they are retiring and do not have an heir to take over. The sale gives them a great return on their investment if they follow a careful plan. Brokers help business owners get started and show them what documents are needed to show profitability and growth for […]

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Business owners choose to sell their business when they are retiring and do not have an heir to take over. The sale gives them a great return on their investment if they follow a careful plan. Brokers help business owners get started and show them what documents are needed to show profitability and growth for the company. When preparing for a business sale, the business owner must start ahead of time to avoid common mistakes.

Why You Need a Broker

A broker presents assistance for the business owner when they are preparing to sell a company, and the brokers manage everything for the business owner. They present a marketing plan to present the business to potential buyers. How the broker presents the business to investors determines the volume of potential buyers, and the broker must show the buyers how the company generates profits. Buyers want a profitable company that gives them a great return on their investment. Business owners can get help at CGK Business Sales when they are ready to start the process.

Work with Accounting Department to Set up Proper Financial Records

The business owner must prepare accurate financial records for the buyers, and it is recommended that the owner works with their accounting staff to review all financial records for inconsistencies. The records must present a clear picture of the company and its earnings.

Buyers research the records and will turn away from the sale if any of the details are inaccurate or misleading. The buyers have access to financial records for at least the last three years, and they will determine if there has been a decline in profits. The records must show steady growth and higher profits as each year passed.

Create a Plan for Closing Sales and Making the Company More Profitable

The business owner must take steps to make the company more profitable before selling it. They may streamline manufacturing processes to generate a higher volume of products to generate greater profits. The company may take steps to present a new product to the public and set up contracts with more business partners. If they obtain contracts that present high profits, the company will be more appealing to a buyer.

The new plans must show steady growth and higher profits moving forward without the existing owner. The business owner must set up strategies to increase the profitability of the company and give the buyer an extraordinary return on their investment.

Find Out How Much the Company is Really Worth

An official appraisal is performed to define the current value of the company, and the business owner reviews the appraisal to arrive at a selling price for the company. It is not likely that the company will get more than the appraised value. The company’s net worth dictates how much the business owner may receive when selling their company. If the company remains profitable, it may give the owner room to negotiate with a buyer.

However, any decline in profits may lead to lower offers for the company and its assets. The business owner must plan ahead for these probabilities and find ways to get the most out of their sale.

Set Up Executive Summary for Potential Buyers

An executive summary explains what the company does and who they are. It is necessary for the business owner to create a summary to present to the buyers and show them what they can expect when buying the business. It must explain how the business operates and what products they create or sell. If the business performs services, the business must explain how these services are rendered and what policies apply to their workers.

Some buyers may choose to make changes in how the business operates and apply their own unique brand to the business. The summary must explain any previous attempts to brand or change the company and the outcome.

Assess the Current Market

By assessing the current market, the business can determine the best time to try to sell their business. They will not want to sell the company when the market is at an all-time low and profits will be far lower. They want to choose a time when they are more likely to get the most out of the sale and avoid significant financial losses.

The broker assesses the current market and shows the business owner their options. Starting the process two years ahead of schedule gives the business owner time to plan their sale. The broker guides them through the process to find qualified buyers willing to pay what the owner wants for the company.

Keep the Sale of the Company as Private as Possible

It is in the company’s best interests to keep the potential sale of their company private. If the business owner allows the workers to hear that they are selling the company, the workers are more likely to abandon ship. They will become fearful and start looking for other jobs. This will have a devastating effect on the business and its success. The owner should never tell the workers about the sale until they have a buyer lined up to purchase the company.

Setting Terms to Protect Workers

Business owners take steps to protect existing workers. The terms of the contract prevent a buyer from terminating the workers without a valid reason. Since the sale is not a merger, the company can secure its existing staff and require the new owner to take on the same staff in the sales contract.

Business owners follow careful plans when trying to sell their business. The steps require them to create a plan for selling and preparing for the sale. A broker guides business owner through a business sale and shows them what documents are necessary for the buyers. When reviewing the business, buyers want to see how it earns profits and define how the company continues to grow in the upcoming years. Buyers won’t purchase a company that is in financial trouble. Business owners can work with a broker to get ready for the sale and get the most out of the transaction.

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