Although it seems like only yesterday, it’s been years—decades, even—since you turned your business from a promising idea into a quantifiable success. You’ve got a winning product, loyal customers, and strong employees who have been with you for years. Now, you’re ready to pass the torch to someone else and either retire or apply your talents to something different. In other words, you’re looking to sell.
You may be ready to sell, but is your business? To improve the chance of a successful sale, there are four important things you should think about before you put the company on the market.
- Has a thorough business valuation been carried out?
When it comes to assigning a dollar value to your business, multiple factors come into play, some of which you may not even be aware of. Having a professional valuation carried out will not only give you an accurate and credible estimate of what the company is worth, it will also expose weaknesses that should be reviewed and corrected before you officially list it for sale. A professional valuation can even expose the business to a better class of buyers, as quality investors always want to see a valuation report before they say yes or no.
- Is the business currently doing well?
Past successes can show promise, but buyers don’t want to sink their money into a company that might already have seen its heyday. They are going to want financial evidence that the business has a sustainable future and can be expected to keep turning a profit. Remember: revenue and profit margin are two different things. The first means that the company makes money. The second indicates that it makes money for its owner(s).
- Do you have your affairs in order?
Potential buyers will want confirmation that all of the business’s affairs are in order. This includes:
- Balance sheets
- Tax returns
- Financial statements covering 12-month periods
- Valid licenses and permits
- Customer and vendor contracts
If the company has any outstanding financial obligations, judgments, or other legal issues, take care of those first, as no buyer will want to inherit a liability of any type.
- Are you ready to pass the torch?
Can your business survive without you? Many entrepreneurs admit that they are the only reason the company continues to be successful. The reality is that buyers are more interested in companies that can remain profitable without the founder/owner’s ongoing involvement. Once you’ve made the decision to sell, start delegating important responsibilities to current employees or hire new ones who can handle them efficiently. Only when you have successfully removed yourself from key roles will the business truly be ready to sell.
Addressing all of these points will improve your chances of getting the sale price that puts you in an optimal position for future success. For experienced and qualified advice on how to orchestrate the sale of your New York or Florida company, contact Rosen Law today. We will ensure that all contractual obligations are carried out as required by state law and use our experience in business sales to help you make the company as attractive as possible to the right investor.