One of the most critical and important decisions an entrepreneur may need to make is when, how, and if to sell their business. This comes under the heading of an exit strategy.
An exit strategy, and specifically the one I will address here, namely selling a business, needs to be considered from the inception, when one first establishes their business. This is an integral part of a Business Plan and a road map of intention.
A business attorney and a CPA/Accountant can be of great assistance in the process of selling a business. I will share my experience in selling my business as an example. When I started Beardsley's Natural Foods in 1988 my goal was to maximize profit and show growth from year to year. A potential buyer wants to see yearly growth and the potential for continued growth into the future.
I initially attempted to sell my business while continuing to manage and grow. It became obvious that I could not do both at the same time and I decided to hire a business broker. The broker, my accountant, and financial advisor all helped me establish a value for my business, a key first step. I had a nondisclosure, confidentiality, and non-compete document drawn up with a hefty penalty, before I provided any business documentation to potential buyers.
The business broker fee is negotiable and you should be clear as to what the role of the business broker is and what you as the seller can do. Generally speaking, expect to provide three years of tax returns and income statements to potential buyers.
It is also important to know that this entire process can take several years. Thus it is important to know when you wish to finally sell your business and allow for the possibility that it may take significant time to do so. If you have questions or need advice about the particulars of selling your business, please email me and we’ll set up a time to talk.