Selling a private business is complicated, with many financial and personal factors to weigh. Proper planning and guidance are essential for a favorable outcome.
As a business owner, follow this 10-step process when considering selling your company:
Reflect on Goals and Timing
Carefully evaluate your reasons for selling and expected timeline. Discuss with family and advisors. Don’t rush this reflection phase.
Assemble Your Advisory Team
Retain experienced M&A, legal, tax and wealth management advisors. Choose professionals who work collaboratively.
Understand Valuation Methodologies
Get a professional valuation. This will establish realistic expectations. Benchmark against recent sales in your industry.
Evaluate Deal Structure and Tax Implications
Stock vs. asset sales have major tax and liability differences. Model after-tax proceeds under various scenarios.
Prepare the Business
Resolve operational gaps that hurt value. Make management self-sufficient. Consider cosmetic improvements.
Enhance Business Value
Implement changes that support higher valuation – cost reductions, new products/services, revenue growth initiatives.
Market Strategically
Use advisors to create teasers, target qualified buyers and control the process. Avoid early information leaks.
Manage Due Diligence Smoothly
Prepare requested documents and data rooms proactively. Maintain operations despite disruptions.
Negotiate Effectively
Know major deal points thoroughly. Listen to buyer concerns. Remain engaged but let advisors negotiate.
Plan Post-Sale Integration
Work with buyer on transition issues like financial management, operations, employee retention.
