The Best Approach When You’re Thinking Of Selling Your Business

If you’re thinking of selling your business, for whatever reason, you might be wondering where to begin. It’s not like selling a product or service which is something you’re used to, and there are things you should know before delving into it. There are different ways to sell your business, with the options available based on criteria such as the nature, size, and sector of your business.

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Selling options

The majority of businesses are sold through a trade sale to another business, usually one in the same or a related area. Other choices that may be open to you include:

  • finding a private-equity buyer
  • a management/employee buyout perhaps with the help of a venture capital firm or bank loan 
  • attracting a private investor

How much of the business should you sell?

There are various different sale choices available; the one that is best for you will be determined by your unique circumstances as well as the legal state of your business. The buyer will have a viewpoint on deal format and how they intend to make a purchase, so you must clarify what you want to achieve and how you wish to organise a sale early on. If you are only selling part of the business to an investor, you should put together a portfolio or website with “our popular categories” listed so potential investors can see from the get go what they’re investing in. This will save time and money, as well as prevent unnecessary delays. When launching a business, think about your exit strategy.

Decide whether you want a partial or full sale

You may wish to sell the entire company or keep a minor share in it. The buyer may insist that you retain a portion of the ownership and continue to be involved. This might provide the firm with continuity and offer the buyer confidence that the business will thrive, but ultimately it’s up to you.

Selling your assets

Instead of selling your company, you could sell assets such as equipment, intellectual property, or your customer list. This could be appealing to a buyer who does not want to assume duties and commitments.

For example, the buyer may be unwilling to hire your employees. You will be left with whatever assets and liabilities were not sold. When deciding on the best agreement structure in this scenario, tax and legal guidance is necessary. Seek professional financial advice or learn more about asset transfers and sales.

Money upfront or phased payments

You can request payment in full when the sale is done, or you can take payment in instalments. The purchaser may decide to pay in instalments. However, you will be at danger, for example, if the buyer is unable to make future payments.

Some buyers will wish to make a series of payments based on profitability. That’s fine. In which case you may be required to stay with the company for an extended period of time. This is commonly referred to as an ‘earn-out’. Your decisions can influence whether or not customers are interested and how much they are willing to pay. 

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