So you’ve been thinking you’d like to sell your business, retire and have some fun. Does your business own you instead of you owning the business? Or do you have other business interests you would like to pursue?
Determine the Value of the Business
The first thing you need to establish is what the business is worth and what the bottom line price is for you to walk away. One of the best ways to find this out is through a Third party Business Evaluation.
Speaking with someone who can look at your business unemotionally and determine what (SHHH) the business is hiding in cash, and recast the financials to shed a different light on the tax returns or P&L statement. Let face it everyone pays his or her accountants good money to make them look bad. It’s the American way trying to avoid a higher tax liability.
Trying to base your sale price on gross sales is totally irrelevant in helping, and basing it on net worth could cost you thousands of dollars. Setting the asking price will determine if your business sells next week or next year.
Plan for the Tax Consequences of Selling Your Business
Next you need to contact a Certified Financial Planner (not your accountant) with a background in Capital Gains and Business Transactions. Why? Tax consequences. If you decide to take all cash now, you will be liable for the taxes in that year.
There are ways to defer this if you plan ahead prior to the sale. Charitable Trusts, Complex Trusts, Installment Sale, Installment Trusts and Business-to-Business exchanges are a few of the options available to you. You will need to find the best option for your situation. It doesn’t matter if you are going to ask $50,000 or $500,000, why pay more taxes then you have to.
Market the Business for Sale
After that you will need to market the business for sale. Various ways to do this are by word of mouth, talk within your industry, list it locally, contact a realtor or a broker, list it on-line or or use an advertising match making service. If confidentiality is an issue with the sale of your business, the last option would be your best choice.
Find Qualified Buyer
Customers, bankers, employees and competitors finding out that your business is for sale could end up costing you in tons of lost sales and additional pressures while you are waiting for a buyer to appear and rescue you.
Finding the qualified buyer and trying to weed out all the tire kickers while keeping the sales humming could end up being an extra full time job.
Close the Deal
Last is closing the deal. Each situation is unique and ultimately has to be agreed upon by the parties involved. You can use your attorney or a business broker charging about 1 percent at closing.
Sellers: Are you cash only and goodbye? Will you become a Consultant for a fixed period of time? Would you even consider working for the buyer?
Buyers may want to move in and take over by a certain date. They may want to hire someone to run the business for them or it could be an investor or investors bringing in there own people to take over.
If you have done your homework as a seller you will be on solid ground before you sit down at the table in front of a buyer. There is at least 1 qualified buyer for every business. Your problem is, you have to find him.
Recommended Readings on Selling Your Business:
- 20 Questions to Ask When Selling Your Business
- Determining the Price of a Small Business
- How to Choose the Right Business Broker to Sell Your Business
- How to Prepare a Business for Sale: What Your Buyers Need to Know
- Selling Your Business: Important Documents Needed
- Closing a Business: What You Need to Do
Recommended Books on Selling Your Business:
- How to Buy and/or Sell a Small Business for Maximum Profit — A Step-by-Step Guide: With Companion CD-ROM
- Businesses For Sale: How to Buy or Sell a Small Business – A Guide for Business Buyers, Business Owners & Business Brokers
- The Complete Guide to Selling a Business
- 11 Things You Absolutely Need To Know About Selling Your Business
- Selling Your Business For Dummies
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