Business for Sale
Decide to put your business for sale
Know first that you want to put your business for sale. No doubt, there will be a lot of heartburn involved. After all, building up the business has taken up the best years of your life and you would want to make all the sweat and toil worth it. But, there comes a time when you have to take a decision to sell for many reasons. It’s then time to let go. All you can do now is make sure that you get the best deal and a buyer who will look after your business for many more years to come.
Sell a Business affects a lot of people close to you. Make sure to take into confidence your family and close friends, your employees and your vendors. Let your family and close friends in on why you have taken the decision to sell the business, and the possible consequences of it. This way if the sale doesn’t go as well as you had hoped, you will have their support and will be able to focus your efforts on straightening things out on the professional front, without having to worry too much about the repercussions on your domestic life.
Vested Business Brokers can be relied upon to give you that much needed support.
Using a Broker to sell a business
Once you’ve decided to sell your business, the next question becomes should you try and handle the sale yourself or use a business broker. While you can certainly try to go it alone, there are some advantages to using a business broker.
A business broker can help you get a fair valuation for your business. Often they have potential buyers lined up and can close on a sale fairly quickly.
The last thing you want to happen is for you to get stuck in the mountain of paperwork that Sell a Business involves. You can still keep an eye on the sale and make sure that you’re getting the best possible deal, but using a broker will save you a lot of time and stress. Count on Vested Business Brokers to get you the best deal possible.
Your sale is taxed differently depending on the nature of the sale i.e. whether you’re selling the business as a collection of assets or as a single entity. Business brokers often have tax professionals that will help figure out how much you will potentially owe in taxes and also help you minimize your losses to taxation.
Business Valuation
When selling your business it is important to define what you want out of the sale. Why are you selling? This will help determine the best valuation possible.
There is no fixed way to decide on a price. While arriving at a figure, take into consideration:
- the value of your assets;
- the goodwill of a satisfied client base;
- the net income of your business;
- your company’s potential for future income and growth; and
- what other similar businesses have sold for
Don’t let your emotional attachment to the company be a factor while deciding on the price; the buyer cannot be expected to care whether success fell into your lap or whether you went without sleep for a year to bring your business to life.
There is really no fixed way to value your business, and there are problems with methods that rely on the above factors. For instance, calculations based on asset value can result in a high price for a company that has offices full of computers and furniture, but that shows very little profit.
Similarly, taking the company’s potential for growth as a major factor in your calculations would mean relying too heavily on predictions about the future.
Whatever method you do use to value your company, prospective buyers may bring up these various points (i.e. the value of your assets, your net income etc.) during negotiations so it is a good idea to be aware of them anyway.
If you plan to pay off your company’s loans while selling it, then the interest on those loans can also be added as a factor to the value, since you will not be passing them onto your buyer as expenses.
While assessing the value of your company, you are entitled to add back expenses that your buyer may choose not to incur.
Perhaps while conducting business you’ve been billing first class air travel, five-star accommodation and expensive entertainment to your company, and thus saving on tax.
It is for your buyer to decide how he or she prefers to conduct business; their style may not involve as much travel or entertainment. Since these are expenses that are at your buyer’s discretion, you can legitimately add them back to the value of your company.
With Vested Business Brokers expertise you can be sure to get yourself a fair valuation.
Signing the Deal
Once the buyer has been identified, you will have to sit down and hammer out the terms of the deal- the exact nature of the sale, the mode of payment and your relationship with the company, the buyer and the industry after the sale is completed.
After signing the sales agreement, you will have to facilitate the transfer of the company to the buyer by providing her with keys to offices and vehicles, certificates and manuals of all your assets and equipments, lists of buyers and suppliers and all other relevant property and documents.
Trust Vested Business Brokers to take care of all the necessary details before closing your business for sale.