Checklist for Selling Your Business

Selling your business can be a hard thing to do because you have invested a lot of time, money, and energy into it. Things get even harder when one of your competitors starts to show interest into buying your company. There are some things to consider before actually initiating the selling process.

What to Take into Consideration When Selling Your Business to A Competitor?

Identifying Competitors

Make a list with all your business competitors who are also potential buyers. You are supposed to know your competition already very well. However, if you feel like it, you can go further on your quest to discover who your buyer is, using a much closer approach.

Furthermore, you should also create an attractive marketing strategy through which you can determine your potential buyers to make higher biddings. You should set a time frame in order to persuade your competitors to make a more than decent offer. There is no easy way to do this. You will probably find yourself in the middle, between your stakeholders and your buying prospects.

Doing a complete research can take time. As a CEO, you are probably busy. Even though you can delegate some of these tasks, you should still be in charge of the overall situation and keep an eye on every step of the process.

Hold On to Your Key Employees

Keeping your good employees when making a sale is as an important thing for your future business as it is for your professional life. Things might get complicated when some of your employees have equity in the company. In this situation, you must come with a solution to create a win-win strategic approach. As a business owner, it is your job to both hire and dismiss employees.

Make sure you will continue having a great team with an efficient and productive staff. If it comes to choosing between firing someone from the management or a subaltern, you should definitely keep the simple employee instead of the manager. As long as you remain with a good and enthusiastic team, things will work out fine.

The key element is to have an open communication with every person of your staff that you want to continue working with. Offer them incentives to keep fighting by your side, and give them solid arguments on why it is the right time to make a sale. Furthermore, retaining your best employees will increase the amount of trust that a potential buyer has regarding your company.

Find The Real Value of Your Business

Ask for your customer’s feedback. Be everywhere, talk to everyone. Keep open. Create opportunities for a wide bidding process. This way, you will not be at the mercy of just a few competitors. You should perfectly know the true worth of your company while keeping a realistic view of the whole big picture.

Everything is complicated, especially when your company is listed on the market, and it has public ownership. With your stakeholders and shareholders breathing down your neck, things can get a little stressful. However, a CEO takes decision based also on his/her intuition, even if this might interfere with others’ opinions.

During a sale negotiation, almost always the buyer has more aces up his/her sleeve. Therefore, it might seem that they have more control over the whole process. If your company is really good and has a strong overall performance, you will have more buyers at your door.

Protect Your Business

Be aware of deceiving competitors. Some of them might only want to peek inside your business’ backstage. Therefore, you should take caution measures when sharing sensitive information with your potential buyers. Usually, a business owner doesn’t offer these details until the buyer hasn’t signed the purchase agreement.

The biggest dilemma of any business owner that has to sell his/her company is whether actually to sell it or choose another path such as a diversifying strategy. This is why you should never rush into making a sale. Sometimes, after giving it a second thought, you might discover other ways in which you can save your business and keep it growing.

You can resume things at two simple strategies. If your company’s total worth is high, you can sell. When the market has a big potential, and your product is almost flawless, selling might not be the wisest decision.

Consider All Tax Implications

Before actually making a sale, you should think about a careful tax planning process. Furthermore, a good tax plan can positively impact the way that your business’ finances will look in the eyes of the potential buyers.

For this to happen, you should either find out all the necessary things regarding legal tax minimization planning or hire a competent legal advisor to offer you an expert’s opinion about how you should proceed with the selling process.

Even though a CEO or a business owner has many attributes within the company, you should be aware that you cannot do all the job by yourself. You should either work in-house to solve this issue or you should choose outsourcing. Working with a freelance financial professional might save you some money.

Keep Your Focus On the Future

Keep in mind that buyers are mostly interested in profits rather than revenue. Therefore, be careful with the way you are trying to impress them. If your business was a success a couple of years ago does not mean that it will attract more buyers. Especially if your company has been struggling in the last period, your previous success will be totally irrelevant for those who are even slightly interested in your company.

Furthermore, all potential buyers will want to see proofs of your business’ achievements. From invoices to bank statements, get ready to show them verifiable proof of your revenues as well as profits. However, pay attention to how you manage all this because hiring an accountant is not always cost-effective.

Be Open On the Market

This means that you should always be honest and transparent when discussing the selling terms with your potential buyers. Tell them everything they need to hear right from the beginning. Even if you want to cover some things that did not work well in your business, the truth has a way always to show up at the surface. Moreover, keep a realistic thinking because a perfect company does not exist in the real world.

Honesty is the best way to create respectful business relationships as well as profitable and equitable transactions. Therefore, you should expect a lot of questions from your potential buyers, and you should not avoid answering them.

Putting It All Together

You should not rush into selling your business. Before doing that, you should carefully consider many aspects like the ones described above. Think if the timing is right and if you will not regret this decision later on. Furthermore, you should understand that every business has its vulnerabilities. Do not get too defensive when negotiating a selling with a potential buyer.

Therefore, you should accept both the company’s strengths and weaknesses. If your budget allows it, it is highly recommended to seek professional advice when it comes to legal and accounting matters.

All in all, selling your business can be a painful and complicated process, especially when your potential buyers used to be your competitors. However, if you consider that the timing is right, then you should make the sell but not before taking into consideration all the things described above.

Image source: Pexels

Amanda Wilks is a Boston University graduate and a part-time writer. She has a great interest in everything related to job-seeking, career-building, and entrepreneurship and loves helping people reach their true potential.

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