How to Prepare for a Business Sale

Business owners set up the sale of their company by evaluating the current market and determining the net worth of the business itself. They compare the value of assets that the company owners and considers how much they could generate if they sell the business, its property, and assets.

When comparing these values, they must consider how much they owe and if they can settle debts and get the most out of the sale. Brokers can help business owners sell their business or take steps to liquidate it. By examining their options, the business owner chooses the best option for them.

Get a Comprehensive Valuation for the Entire Business

The business owner starts their journey to selling the business by getting an official valuation for their company. The appraiser examines all financial data for the business and assigns a value to the business, its products, and any assets the business owner owns currently.

The valuation shows the business owner how much their assets are worth, and they can review the potential profits of selling their company to buyers or investors. Business owners can get a valuation by visiting CGK Business Sales now.

Explain Why You Want to Sell

The first objective for the business owner is to decide why they want to sell their business. The reason defines what they need to do when selling the business and its assets. For example, if the business owner wants to retire from business altogether, they will need to liquidate their business and its assets.

The owner has the option to sell off the business assets together or separately. The valuation shows them how much they can generate from the sale based on several different scenarios. These scenarios help the business owner make choices about the sale and capitalize on the sale more effectively.

Reconcile All Financial Data

When selling a business, the financial data must be in order and accurate. When reviewing the business as a possible investment, buyers can review the financial records to determine if they want to purchase and operate the company.

A business that has inaccurate financial records presents itself as a major risk, and the buyers won’t know how much the business is worth until they reconcile the financial records. Business owners that take the time to reconcile all their financial data present accurate records to buyers, and the business or its assets become more appealing.

Settle Debts Quickly

The business owner must review all their outstanding debts and follow steps to pay them off. The sale of their business may not be something that is completed in a short amount of time, but they should start to prepare for it. By calculating all the company owes currently, they can create a plan to settle the debts and improve the company as an investment.

In a business sale, some investors may offer to pay off some of the debts in exchange for product details or a patent for a specific design. The business owner may have access to these advantages, but if they are swimming in debt, it is less likely to happen.

Set Up New Lines of Profits

The company must remain profitable to attract buyers. If the owner isn’t planning to shut down the company, they need to find new ways to remain profitable. If the company has new product designs, they should set up plans for launching the products and generating profits.

If the company has a stable source of profits, the new owner can take control over any products that are included in the sale. Investors want to get involved with companies that have a steady history of profits, and declining profits could be a sign of financial problems that may drive buyers off.

Decide What Comes with the Business

By reviewing the assets and the business itself, the business owner makes choices about their company and all assets it owns. Typically, ownership for the assets is listed under the business name or the business owner’s name.

When placing the property on the market, business owners may sell assets that are owned expressly by the company or organization. They have the option to keep any assets they want, but assets that aren’t included with the business sale must be transferred to the business owner.

Manage All Contractual Obligations

The business owners must review all contractual obligations, and the business owner must fulfill these obligations before selling the business. A breach of contract could lead to increased financial losses for the business owner. They should also manage these requirements before selling unless their business partner or clients agree to transfer the contract to the new owner. The terms of their contracts define what is possible when selling the business and its assets.

Ensure All Tax Returns Are Managed Properly

The company must have all its tax returns in order. The business shouldn’t have any overdue tax payments or liens that could present a financial issue for the new owner. Business owners must create a plan to pay off these tax payments and keep them managed up to the end of the sale.

They will need to file a tax return for the business within the same tax season as the business sells. The owner must fulfill any tax-related obligations related to the business when it sells. This includes paying any tax payments required for the final year they owned it.

Business owners sell their companies for a multitude of reasons including retirement and just wanting to do something different. Regardless of their reasons, the business owner must consider what assets they want to keep and what they want to include in the company sale. If the business remains operational, the owner may need to include terms that protect existing workers and prevent them from losing their jobs.

The business owner has the right to include any terms or clauses in the contracts to prevent wrongful termination or to cause a sudden decrease in the workforce. A business sale starts when the business owner has checked off all their checklist items and is prepared for the sale completely.