6 Steps To Selling A Business

Selling a business can be a little daunting. While you may be eager to start the next chapter in your life, finding a buyer for your business and handing over the reins can be a long and complex process. Many business owners do not know where to begin, and may even delay selling their business because of this. To help get you started and guide you through the process, here is a simplified six step framework that you can follow.

Consider your goals

Start by considering what your goals are. Are you trying to make as much money as you can from the sale to fund your next adventures? Or are trying to guarantee as quick a sale as possible? Do you want your business and brand to be preserved as part of your legacy? Or do you not mind what happens to your business after it is sold? Also, do you want to leave your business behind for good? Or would you prefer to still keep a foot in it?

Selling your business is not just a transaction, it is a strategic transition, which is why choosing the right marketplace matters. Platforms like Flippa make the process easier by connecting you with qualified buyers, offering valuation tools, and giving you the support needed to maximize your sale price.

All these questions will help you to decide how to sell your business the right way. If you want to fully exit your business as fast as possible without a care as to what happens after, you may need to consider settling for a smaller sum or potentially closing your business and selling off your customers and assets instead. If you want to make money from the sale, preserve your brand and potentially stay involved, there could be options to explore like partial sales, earn-out clauses or becoming a board member. Business legal consultants and brokers can help you explore the steps required to meet your goals.

Prepare your business

Selling any business requires doing a lot of preparation. A buyer will want to do their due diligence, so you need to make sure that all your financial records are in order (an accountant can help with this) and that you have copies of all necessary legal documents. You may also want to start writing a takeover handbook that includes all important client/supplier contact details, payment details and any other information that could be useful. 

If you want to make a good amount of money from the sale, consider whether it’s worth fixing a few issues with your business to make it more attractive. This could include resolving any legal disputes, paying off as much debts as you can, finding extra ways to boost revenue or taking steps to improve your reputation (such as building lots of positive reviews). 

Get a professional valuation

A professional business valuation can accurately determine how much your business is worth. This ensures that you don’t set the price too high (which could deter buyers) or price it too low (which will leave you out of pocket).

Depending on the type of company, different value drivers can be used to determine your value such as your income, assets, market position, brand reputation and the quality of your staff. A broker service or professional appraiser will help you assess all of these. 

Assess buyers

The next stage is marketing your business to prospective buyers. A business broker can help you create a ‘teaser document’ to present to potential buyers without revealing too much. There are platforms where you can then advertise this document. For buyers who show serious interest, you can then show them a more detailed document of your business (often referred to as a Confidential Information Memorandum (CIM)). 

It’s possible you may already know someone who wants to buy your business - this can make this process much easier, however you still need to vet them to check that they truly have the available funds and won’t suddenly pull out. If you want the buyer to pay you in ongoing installments, consider whether a credit check could be worthwhile. If you care about the legacy of your brand, consider choosing someone with previous experience running a successful business.

Negotiate offers

Once you start getting serious interest, the next stage is negotiating the price and the terms of the sale. Some buyers will be happy with any terms you offer, but others may want to do a lot of bartering. If multiple buyers are interested, you may have to negotiate with each of them to find the best offer. A business broker can help you with all of this.

Buyers will want to see all your detailed records during this process, so be prepared to go through these. Withholding information could result in your losing promising buyers. 

Close the deal 

Come to an agreement? The next stage is creating a legal document called a Sale and Purchase Agreement outlining all the terms and conditions of the sale. Hire a lawyer to help you with this.

The transfer of ownership and funds can then begin. Be prepared to stick around for a while to introduce the new owner to customers and clients and guide them through any necessary admin so that the handover is smooth and there are no repercussions.