Selling a Business – What You Need to Know

Selling a business can be an emotional, complicated process. It involves a range of issues, such as the transfer of assets, intellectual property, and employee contracts, as well as tax considerations for both states and federal. It is crucial for the owners to have a clear understanding of what they are entering into before they begin the process.

A business valuation will allow you to determine the value of your company and set expectations. This is a crucial part of the process and should be conducted by a professional, like a business valuation expert or a mergers and acquisition specialist.

The current economic climate and anticipated trends in the industry can also affect the value of your business. A strong economy could suggest that the time is right to sell, but an over-saturation of your industry could cause you to hold off until the conditions improve. It is also important to consider whether you’re emotionally prepared to sell.

The most important thing to consider is the amount of your personal stake in the company you are willing sacrifice. For instance, if you daughter was involved in the operation and has been involved in the business, it could be more important to you that she remains involved after the sale. Other factors to consider include your desire to carry on family traditions or the level of recurring revenue for the business, which may make it easier for banks to cover debt, and could increase the value of the sale.

Once you’ve successfully promoted your business and received interested buyers, it’s the time to start negotiations. Be prepared to explore creative strategies to bridge the gap between your goals in negotiations and the buyer’s needs, including ways to finance your business, earn-out arrangements and a possible ownership stake in the company.

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