How do I find the best price for my business?
Many factors make a business attractive to a buyer. These can include a loyal customer base, a competitive advantage (i.e. intellectual property rights, long-term contracts with clients, exclusive distributorships), growth potential, desirable locations, and a skilled work force. But, before selling your business, make sure you are mentally and emotionally prepared. Unfortunately, many business owners experience remorse or burnout after selling their businesses.
The first thing to do after selling your business is break any confidentiality agreements that you may have with employees. This will also mean that you will have to tell any clients and vendors about the change in ownership. Once you have disclosed the change of ownership, it will be public knowledge. The business owner may still have to stay on after the sale, but he or she must meet any employment agreements and collect payment. Ultimately, selling your business can be a great way to get a higher price than you can achieve with your current business.
Other reasons to buy a business available for sale are a need for liquidity and the desire to remain involved in your business. A seller may feel that the time is right when the industry is doing well and competition is stiff. However, it can be difficult to refuse an offer from a buyer. Whether you have to sell your business or not, it is an important decision. A business is most valuable when it grows profits year after year. In addition, the selling process will give you the liquidity you need to continue running it.
As with any negotiation, the final value of your business may not always be the most important factor in deciding whether to sell. Buyers will often investigate your pricing strategy and make a decision based on a variety of factors. This means a seller may be able to reallocate certain assets to another area of the business. A seller may be able to reap tax benefits by recognizing that they own a capital asset. A business owner should also be aware of taxes that may be due on profits and sales.
In addition to tax benefits, selling a business can take months. From the first step to closing, a sale takes six to twelve months on average. During this time, buyers will review your marketing materials and assess your business’s economic value. Eventually, a buyer will approach you and submit a marketing packet, including financial and operational data. Upon receiving a buyer, the owner will negotiate a purchase agreement and may even agree to a non-compete clause.
Lastly, you must determine what your future plans are. Are you going to take a short break, seek support, or sell your business to someone else? There are times when an involuntary sale is inevitable, such as when a partner dies or divorces the business. In any case, be sure to make the best of a bad situation and do your due diligence. If you do decide to sell your business, make sure it fits your needs and desires.
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