Most business owners who are looking to sell make the mistake of not preparing early enough. This can result in not receiving the maximum dollar amount for their business.
The selling process should start when you buy your business. You should know the return you are receiving on your investment so that you will not leave any money on the table when you sell. To consummate a successful sale with a qualified buyer, each VR business intermediary has been trained to help you take the necessary steps. Most business owners should prepare to sell long before deciding to move forward.
The following are some helpful ways to keep your business in good shape and prepare you for when the time’s right to have your VR business intermediary search for a qualified buyer.
Evaluate Your Business Before the Buyer Does
Ask yourself, “How much can I sell my business for?” If you want the buyer to avoid finding anything that could jeopardize your chances of successfully selling your business, you should perform due diligence before they do.
A qualified buyer will perform a comprehensive evaluation beyond financial records; therefore, ensuring everything is accounted for before presenting the business to them is wise. Make sure that the due diligence covers a variety of different areas, such as:
- Operations
- Marketing
- Personnel
- Technology
- Legal
- Regulatory
- Environmental
- Insurance
- Contractual, credit, and accounting issues
Every buyer has specific criteria they will not compromise on, such as their return on investment. Depending upon the industry, current economic climate, and the type of buyer that walks through the door, it’s essential to understand their needs before negotiations. As the seller, you can maximize the likelihood of completing a successful transaction.
Clean Up Your Balance Sheet
Buyers will always examine balance sheets first after they sign a confidentiality agreement so they can start reviewing the business. You want to avoid revising a balance sheet after this point. Doing so will raise concerns from the buyer about the legitimacy of the business’s financial documents and increase the chance of the deal falling apart. If there is real estate, equipment, copyrights, patents, or excess cash you do not want included in the balance sheet, remove them before a qualified buyer reviews them.
Have Your Financials Audited
As a seller, you will put your business in a better position for sale if you have financials audited. This will help give the company legitimacy and value to a qualified buyer. They will want to make sure everything financially is accurate and correct through their due diligence, and this will help move the process along. At the very least, a seller should have a credible CPA observe the year-end inventory and file it away if you can’t afford an established auditor. The cost will be minimal, often making a retroactive audit possible if all other financials are in order.
Ensure You Have Stable Management in Place
Many businesses have managers assist the owner in its operation. Unless your business is a one-person show, you must ensure that you have no loose ends regarding management. Businesses that appear to operate “fly by night” will not look appealing to prospective buyers. Stable management that has been in place for more than 90 days is essential. Many buyers in the market for a business consider management to be one of their top priorities.
Use Comparisons to Position Your Company Better
If you’re shopping in a grocery store, it’s natural to compare different brands of foods to decide which one you’re going to purchase. The same analogy can be used for buyers regarding businesses for sale. They will compare similar businesses with yours, so you should compare your financial and operating statistics against your competition. Review sources such as trade associations and bankers’ industry profile books. If you own a business in the middle market, seek out annual reports. A VR business intermediary will assist you in documenting the facts about your competition and objectively comparing the similarities, differences, strengths, and vulnerabilities. It should be both understandable by someone unfamiliar with the industry and believable to someone well versed in it.
Remember, Publicity Generates Value
Having good and credible publicity clippings will not only help visibility for your business but also create value for qualified buyers. In addition to using local and regional press, you can also put yourself in national publications such as Business Week. Many businesses will employ a PR firm or consultant who can generate publicity.
Through VR Business Sales, you will be able to work with advisors with decades of experience working with buyers and sellers in all industries worldwide. We will be able to facilitate the selling process from start to finish, providing you with counsel you can trust.
Need a Business Broker in PA? Meet VR Bucks County
If you’re thinking about listing a business for sale in PA or the Mid-Atlantic, don’t leave your success to chance. Avoid common pitfalls and maximize your return by partnering with a trusted expert in mergers and acquisitions. At VR Bucks County, we specialize in valuing and selling businesses in Bucks County, PA, and throughout the Philadelphia and New Jersey regions. Whether you’re looking to buy a business in PA or preparing to sell your own, our experienced advisors are here to guide you through every step of the process.
Contact us today for a expert brokerage assistance and to help you maximize the sale of your company.