If you are planning on selling your business, there are a few things you need to take into consideration:
•Records: These will map where your company has been, and where it is going. Records are a good tool to see the past, present, and future of a company.
•Answers: Potential buyers will have questions. These questions may help you to understand if now is the right time to sell your company. These answers will also help you to decide who is the right buyer for your company.
Below we will walk you through various elements that are useful when selling your business.
Why Are You Selling Your Business?
This is a question that potential buyers will ask. Some common reasons for selling a business are:
– Sickness or death
– Retirement
– Partnership disagreements
Timing is Key
If you know you will be selling your business in one to two years, it is best to begin planning for this sale as early as possible. This will give you time to prepare financial records, compile client lists, and even provide a business structure to the potential new owner(s). Having this useful information prepared will aid in the sale process when the correct time presents itself.
Record Keeping
As mentioned above, good record keeping is vital in the selling of a business. Good record keeping is important in the running of any successful business. These documents help to hasten tax preparation, monitor if a business is able to expand, as well as guide daily functions and costs of running a successful business. These records will also be important to any potential buyers as a comprehensive tool to whether your business may be a good investment. We can help you manage your financial records!
What is Your Business Worth?
Before deciding to sell your business, you will need to have it appraised to find its value. This evaluation should be done by a business appraiser, who can then draw up a detailed explanation of your business’s worth. This information will be vital in whether the asking price is credible, and give on a gauge on what your listing price should be.
Locating a Buyer
Selling your business could take anywhere between six months to two years. Finding the correct buyer can be time consuming. However, there are a few ways you can keep the process moving forward:
– Have multiple potential buyers (two to three), in case the initial deal falls through.
– Find out whether potential buyer(s) are pre-qualified for financing before supplying information about your business
– Keep in touch with potential buyers.
– Allow room for possible negotiations. However, you should stand firm on a price that is reasonable and takes into consideration the company’s future worth and growth.
– Work out the details with an accountant or lawyer so you can reach an agreement with the buyer.
– Put any and all agreements in writing. Have potential buyers sign a nondisclosure/confidentiality agreement to protect personal information
– Get the signed purchase agreement into escrow.
Once your sale is complete, there may still be documents you will need to finalize. These can include:
•Bill of Sale – This transfers the business assets to the buyer(s)
•Assignment of a lease
•Security Agreement – Seller retains a lien on the business
In addition to these documents, the buyer(s) may also have you sign a non-compete agreement; this document would mean that you agree to not start a new, competing business and take potential customers/clients away for a specified amount of time.
These are just a few elements when it comes to selling your business. Depending upon the business you are selling, there may be more elements you will need to consider. This is why it is always important to meet with a professional for guidance and to answer any questions you may have. Call our knowledgeable team at Perfect Balance Accounting Services to answer any questions you may have when it comes to selling your business in Southeastern Wisconsin. We offer business and personal tax preparation, business accounting, QuickBooks accounting services, business valuation, and accounting payroll services for businesses and individuals in Racine, Kenosha, Oak Creek, Pleasant Prairie, Milwaukee, and beyond.