Selling your business is not something you do every day. Most owners never have. Our experience shows that the process of doing so is a real mystery to most. However, mysteries get solved by asking questions. The five questions every owner needs to answer before undertaking the sale of their business are:
- What is my business worth?
This is the fundamental question you need know before doing anything else. It will largely determine whether or not you proceed with a sale. Working with someone like us who has a finger on the pulse of the market and understands how to value a business will give you a realistic view of the market. We offer complimentary, no obligation valuations for owners taking this first and important step. You can request your free business valuation through our contact form.
- What will be the net proceeds of the sale?
Net proceeds of a sale is the money you will be left with after the transaction fees and taxes due are subtracted from the purchase price. Knowing this number is more important than knowing the valuation since it is the sum of money that will be available to either fund your retirement or pursue another opportunity. Additionally, most transactions are structured with a portion of the purchase price paid with deferred payments that come in the form of sellers’ notes or earn outs. Understanding the tax and financial effects of deal structures with these kinds of terms is also critical. As you may have concluded, involving your accountant and financial planner in the sale process will be an important step to making an informed decision.
- What if my business is not worth what I wish or need it to be?
Often businesses operate in industries that don’t command premium sale prices. This problem is external to the business and not much can be done to change it. Other times, businesses are not as well run as they can be or have an operating deficiency such as high customer concentrations or poor accounting systems that negatively affect a valuation. In such cases, there is much that can be done to fix the problems. Within our own office, all of our agents are capable of identifying what needs to be addressed to improve a company’s valuation and can assist you in implementing the changes. In areas where it is beyond ours’ or your expertise, we can recommend a number of consultants that are capable of executing improvement programs. All of this may require that you defer a sale, but any efforts to improve the business will always yield a higher sales price.
- What is the process of selling my business?
Selling a business involves a lot of moving parts and typically takes six months to a year which is why you should engage an intermediary to manage the process. You don’t want to be distracted from running your business, especially since it is important to have the business perform well in the year you sell it. Click to view our presentation on the 9 Step Sales Process.
- How can I maintain confidentiality?
Maintaining confidentiality is of paramount concern. Sellers generally don’t want their employees, competitors, customers and suppliers to know the business is for sale. At VR Business Sales, we don’t let any interested buyer know anything about the business, other than the basics, without being vetted and signing confidentiality agreements. In particularly sensitive situations, we won’t do anything until we run the name of the buyer by you.