Are you ready to sell your business?

are you ready to sell your business

Check our handy guide to be really ready

 

1. Get your basic documentation right. What’s the mission statement of the business? What have you increased and what have you reduced? Include minutes of meetings, documentation of public agreements and agreements made between partners.

  1. Fully prepare your financial documents. Analyze the balance sheet and have a good look at income statements, profitability, lines of credit, and know the value of its tangible assets. Having audited accounts gives peace of mind to future buyers. Also have at least the last two years of financial statements audited or reviewed and state what income is taxable.
  1. Have commercial documents ready. These should include production, foreign trade, distribution channels, points of sale and wholesale or retail trade. Assess all of these documents and objectively highlight share premiums due diligence, and what fixed and variable interest rates your loans are subject to.
  1. Know the strategy over the next few years. Have a good explanatory brochure or other such document ready to send to prospective buyers. Include the sale price, company history, its ability to generate profits now and in the future and have a business plan that covers at least the next three years. This should give a buyer everything they need to know about the company’s expectations and projections.
  1. Know the value of the company. This should be based on quantifiable criteria and the expectations should be realistic. It’s a good idea to demonstrate the possibilities for improvement. Investment banks can provide this valuation service.
  1. Carefully research and identify potential buyers. To do this you must analyze competitors, as they will be the most likely potential buyers. It is important to make note of the recent sale prices of companies comparable to yours. Knowing who these potential buyers are and interacting with them could be instrumental in not only making a sale but making one on the best terms for you.
  1. Choose the right time to sell. Carefully consider the current market value of your business. Could it change for the better in the near to medium future? Also consider the circumstances surrounding any potential negotiation. It might be worthwhile waiting for your company to reach something nearer its full potential. It can be difficult to locate this sweet spot and the most difficult to judge period is generally when a company is moving from its development phase into what could be a phase of maturity. It’s also best to sell a business before it’s reached its full potential. 
  1. Consider whether you want a confidential or public sale. If you make the sale public, you might adversely affect both the negotiations and your relationship with your team. But if you think this is the way to go, make sure you fully advertise the fact in all possible outlets. However, in doing so, you should also manage information effectively, appropriately and sensitively. The last thing you want to do is alienate your staff.
  1. Remember it’s not over until it’s really over. Not until everything is signed is the sale complete so never assume that verbal agreements mean it is. Even after negotiations, continue to keep your cards close to your chest and don’t reveal problems that could negatively affect the confidence of potential buyers.
  1. Get solid financial, corporate and legal advice. It never hurts to have good specialized professionals helping to structure the whole process and facilitating the negotiation of the sale.

For more information, please contact corporate law firm Argali Abogados.

 

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