The process of selling your business is a huge undertaking and the amount of factors to consider can be overwhelming. Developing a detailed plan before tackling it head-on will ensure a smoother process so the focus can be strategizing on how to sell your business for more. Take a read on the six tips to take into account when preparing your business for an external sale.
Good business means a sustainable way to show performance and profitability - this is the most crucial factor in valuation of your family business.
Many business owners take money out of the business, neglect maintenance or reduce investment as they prepare to exit their family business. This is a fast way to reduce the value of your company, which can ultimately hurt the prospect of external investment.
Update your business plan with measurable goals and milestones for future years. This gives your business credibility for long-term potential, making the business more attractive.
Your business processes should be repeatable and teachable to new employees and management. Train, motivate and empower your employees, especially your management team.
Consult a tax expert early in your succession planning. The structure of your transaction can affect your tax liabilities for which you may need time. Some tax issues that may arise include: an estate freeze, taxation of goodwill, allocation of the purchase price to various assets, sales tax, land transfer tax and more.
Consider working with professional consultants to prepare your family business for sale. Consultants can advise on strategic planning, operational efficiency, sales and marketing. At the very least, they might spot or suggest something you’ve missed.
These six tactics will help cover the main ideas when preparing for an external sale. The objective is to not only make the process as smooth as possible, but also to have an upper hand to potential buyers by understanding what would make your business is worth and how to leverage that information.
For additional information on how to sell your business, contact Skidmore and we'll take it from there.