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Is My Business Ready to Sell?

Guest post by: Peter Watson

Article Overview: Selling a business can be a stressful time in ones life and not being familiar wth the process can make it even worse. Make sure you know exactly what is involved when selling a business.

Is My Business Ready to Sell?

If you feel that you want to sell a business, the best time to do it is when your industry is flourishing, the demand is definitely there, and you can get top dollar for it. Of course, no one can predict the market with 100% accuracy, but one positive sign is when you discover that large corporations, who have never been involved in your industry before, begin buying a number of businesses for sale.

Knowing when to act

As a rule, the best offers come when someone is really interested in buying your company. When they research various businesses for sale, experienced investors calculate the amount of time needed to reach their current level of market penetration and technology, and then decide if they want to proceed any further. To be proactive, try targeting large companies that are extremely profitable, have said publicly that plan to expand, and have started making acquisitions in your industry. In this situation, note that you will have to act quickly because they will probably make only one purchase in each market segment. This means that they will end up buying your business or one of your competitors.

Why deals fall can apart

At times, owners are too unyielding in regard to specific terms of the contract when they are trying to sell a business. To avoid making that error and wasting time in fruitless negotiations, determine ahead of time what price you will accept for your business, and try to be flexible in regard to the terms. Some issues that often turn out to be deal breakers include the following:

● Owner financing - a prospective buyer may want you to finance a portion of the purchase price. With this scenario, you will receive a down payment up front and the remainder will be paid to you over an established time period.

● Equity financing - if another company buys your business, they may want you to exchange part of the sale price for equity shares in their business. For example, you could be paid 50% in cash immediately and 50% in equity shares. There is an element of risk here that requires a long-term approach, and you will need to establish a good relationship with their management team. Remember that if the new owner goes out of business, the shares you are given will be totally worthless.

● Transitioning - you may be asked to work with the new owner to assist them in making the transition and show them the way in which your business operates. This agreement could be in effect for anywhere from a month to two years, and it is something that you will have to consider carefully.

Above, all, when you sell a business, you should work with an attorney who can ensure that everything is in order and that you won\\\'t be short-changed in any way when the final purchasing agreement is drawn up. With this in mind, take the time to find a lawyer who gone through the process of selling a business several times.

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Article Tags: sell a business, selling a business



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