You’ve made the decision to list your business for sale. This next period is crucial to your success in getting the best asking price for your company, and it’s important to be able to identify and navigate any potential roadblocks to a successful sale. Finding the right buyer and establishing a mutually beneficial communication between you can be challenging, but it’s certainly worth the effort. Here are our tips for making it happen:

Set the asking price of your business based on hard data and be prepared to back up your calculations. After you have had your business appraised by a reputable and qualified appraiser, familiarize yourself with any and all information involving cash flow, revenue numbers, and your business’s key assets. When potential buyers approach you, you should be able to fluently discuss any financial strengths and weaknesses. And if there are weaknesses revealed by an appraisal, you should begin the process of addressing and fixing them as soon as possible.

Determine which interested parties are serious. When an owner puts his business up for sale, he must be ready to identify what real interest looks like and what it does not. Because the process of selling a business is involved and requires the disclosure of significant information, it’s better – and safer – to spend as little time and effort as possible on the merely curious. Buyers who are serious know that purchasing a business frequently begins a relationship between the two parties, and they will be interested in details beyond what they might find on a revenue statement or pie chart. They will want to know about your employees and their capabilities, who manages the day-to-day arrangements, and how your business acquired its customer base. Feel free to ask them questions as well, general or specific. Serious buyers will have given thought to how they might finance this purchase or what they would like from you after the sale goes through. They will also be willing to meet with you in person. Interested parties who display none of the above are probably not promising candidates.

Craft your business’s sale story carefully. Ideally, the sale of your business is yet another step in a series of pre-planned decisions, all of them designed to strengthen its performance and value. Which would mean that in the past year or so you have identified and addressed any weaknesses, particularly owner dependence.  However, less prepared business owners put their companies up for sale all of the time and often assume that selling will be easy. If this description better fits you, it’s not too late to begin to address any red flags and fix problems. But if those red flags do exist, think carefully about how you will present them to prospective buyers. Also be willing to deal realistically with buyers who sense difficulties and, understandably, will offer a lower asking price.

Keep communication open during the negotiation process. Discuss various options for payment including financing and SBA loans. If you have multiple interested parties, make sure that they are aware of the interest you have received. If handled adeptly, competition may drive up the sale price considerably. Choose a good lawyer to advise you on the various steps in the process: due diligence, purchase agreement, and closing.

If you as a seller go into this process with awareness, care, and consideration, you will find that, while it may be frustrating at times, things will go more smoothly for you and you will ultimately be more satisfied with the outcome. If we at Calder Capital can advise you in any way about the sale of your business, please do not hesitate to contact us. We would love to talk to you about any concerns you have.