What Should I Know about Selling My Business?

Selling your business can take time and effort. From how to sell to what to look for in a buyer, it can be daunting for a small business owner transitioning into another business or retirement. Forbes’ recent article, “Five Steps For Selling Your Business,” suggests what to consider when selling your business.

1. Decide on Your Preferred Type of Business Sale. There are a few different ways to sell your business, such as an outright sale—where a buyer purchases your business for the sale amount, and ownership is transferred. A gradual sale is similar to having a mortgage, with the sale financed. This provides a flexible option for transferring a business. Some owners sign a lease agreement where the buyer and seller enter into a contract outlining the conditions and payments to have temporary rights to the business.
2. Properly Value Your Business. To receive a fair return for your business, get a proper valuation from a certified appraiser. He or she will conduct a valuation based on your preference. For example, some businesses will use an asset approach, which subtracts total business liabilities from the total value of all assets. Others will use a market approach that compares your business to similar recently sold businesses. Generally a qualified business valuation expert will provide an appraisal.
3. Create an Exit Strategy. The transition period can be a volatile time for many small businesses. An orderly transition plan will help. The plan should include supply chain considerations, financial obligations and client or customer needs to avoid business disruption.
4. Locate a Business Broker. Finding the right business broker, who ideally has experience in your local area and industry, can assist in selling your business. This may not be a need with every business, but can be a great benefit for some.
5. Prepare Estate Planning Financial and Legal Documents. You must have accurate financial documents from the past several years to sell your business. You’ll also need to research the legal documents required to sell a business in your area. This may include a will, healthcare directive and power of attorney.

These steps show the importance of keeping your business organized at all times, so keep updated financial records so you can be prepared to see your business when you’re ready. An experienced attorney can make the process smoother and provide valuable advice about what's needed.

Reference: Forbes (June 23, 2023) “Five Steps For Selling Your Business”