You only sell your business once. It is important to be well prepared when you want to cash in on your years of hard work. Although every transfer of business ownership is unique, there are some key elements you need to consider. The sooner you start thinking about an exit strategy and make
a plan, the better. We have collected some tips that we find useful:
1. Sell at the right time for the right reasons
You get the best price when the market is up and your sales and profits are good, stable or even increasing. Selling a company takes time. There may be things you want done, before you put your company up for sale. The sooner you start planning, the better.
Many owners wait too long because of a lack of planning for a sale, emotion or unrealistic price expectations. Here are a few indicators that it is time to sell: You loose your motivation, your health is deteriorating, you are no longer inclined to invest or engage in new projects, you feel its time to spend more time with your family or on other things in life. Buyers always ask and judge the reason for a sale as they want to preempt hidden issues or trouble ahead.
If you are more owners, it is important you all agree. You get the best value when you offer 100% of your company.
2. Determine what you are selling
There are basically two ways of selling – the legal company (limited or incorporated) with everything, assets and liabilities – or only the assets including the physical assets, goodwill, customer lists, etc. Some buyers prefer an asset purchase as it prevents them from taking over any hidden liabilities in the company.
Real estate is another key factor to consider. If you own the land and buildings, you will often not get the market value of the real estate. Many owners therefore rent or lease the buildings to their label company. We recommend you consider to offer your company with an option for the buyer to in- or exclude land and buildings.
Are there any other restrictions you want to impose ? Some owners do not want to see their company moved to another location. However, the more restrictions you put up, the fewer potential buyers we will find.
3. Sell at the right price and get paid
There are many ways to determine a fair market value. See my blogs on that subject. You may want to get a professional valuator to determine the value of your company. We can help with typical valuations in the label industry. However, at the end of the day, what counts is what buyer and seller can agree in terms of price and how it is paid / financed. Some deals are fully paid in cash, other deals are more complicated with buyers making a down payment in cash and then pay some or all of the remainder in installments. The outstanding amount could be dependent on pre-determined criteria such as sales and profit numbers. Other buyers offer stock in their company. A willingness to be creative with the terms can go a long way toward a successful sale.
4. Get your house in order
Take the buyers view. Assume he will find problematic areas and that eventually all will be discovered. Ensure neat, clean, attractive surroundings, keep machinery well maintained, clarify agreements and contracts, settle minor disputes, update relevant records, get your books in order, etc. Serious buyers want to buy well-run businesses, not neglected ones.
5. Get professional help
We can help you to find serious buyers. Once they are on the scene, the process of negociations, signing of letter of intent, due diligence and final closure can start. As you proceed in your sales process you will need at least a professional lawyer and a certified accountant with experience in M&A on your team.
6. Brace yourself
Selling a business is serious business, so you want to make sure you take the time and trouble to do it right. It can be a long and hard journey, but one with a very tangible and rewarding light at the end of the tunnel. Once you’ve successfully sold your business, savor an accomplishment that not every entrepreneur gets to enjoy. Whether you’re lying on the beach, retiring by the lake or starting your next venture, you did it!!
a plan, the better. We have collected some tips that we find useful:
1. Sell at the right time for the right reasons
You get the best price when the market is up and your sales and profits are good, stable or even increasing. Selling a company takes time. There may be things you want done, before you put your company up for sale. The sooner you start planning, the better.
Many owners wait too long because of a lack of planning for a sale, emotion or unrealistic price expectations. Here are a few indicators that it is time to sell: You loose your motivation, your health is deteriorating, you are no longer inclined to invest or engage in new projects, you feel its time to spend more time with your family or on other things in life. Buyers always ask and judge the reason for a sale as they want to preempt hidden issues or trouble ahead.
If you are more owners, it is important you all agree. You get the best value when you offer 100% of your company.
2. Determine what you are selling
There are basically two ways of selling – the legal company (limited or incorporated) with everything, assets and liabilities – or only the assets including the physical assets, goodwill, customer lists, etc. Some buyers prefer an asset purchase as it prevents them from taking over any hidden liabilities in the company.
Real estate is another key factor to consider. If you own the land and buildings, you will often not get the market value of the real estate. Many owners therefore rent or lease the buildings to their label company. We recommend you consider to offer your company with an option for the buyer to in- or exclude land and buildings.
Are there any other restrictions you want to impose ? Some owners do not want to see their company moved to another location. However, the more restrictions you put up, the fewer potential buyers we will find.
3. Sell at the right price and get paid
There are many ways to determine a fair market value. See my blogs on that subject. You may want to get a professional valuator to determine the value of your company. We can help with typical valuations in the label industry. However, at the end of the day, what counts is what buyer and seller can agree in terms of price and how it is paid / financed. Some deals are fully paid in cash, other deals are more complicated with buyers making a down payment in cash and then pay some or all of the remainder in installments. The outstanding amount could be dependent on pre-determined criteria such as sales and profit numbers. Other buyers offer stock in their company. A willingness to be creative with the terms can go a long way toward a successful sale.
4. Get your house in order
Take the buyers view. Assume he will find problematic areas and that eventually all will be discovered. Ensure neat, clean, attractive surroundings, keep machinery well maintained, clarify agreements and contracts, settle minor disputes, update relevant records, get your books in order, etc. Serious buyers want to buy well-run businesses, not neglected ones.
5. Get professional help
We can help you to find serious buyers. Once they are on the scene, the process of negociations, signing of letter of intent, due diligence and final closure can start. As you proceed in your sales process you will need at least a professional lawyer and a certified accountant with experience in M&A on your team.
6. Brace yourself
Selling a business is serious business, so you want to make sure you take the time and trouble to do it right. It can be a long and hard journey, but one with a very tangible and rewarding light at the end of the tunnel. Once you’ve successfully sold your business, savor an accomplishment that not every entrepreneur gets to enjoy. Whether you’re lying on the beach, retiring by the lake or starting your next venture, you did it!!
