Tips For Getting The Most Out Of Selling Your Company

Posted on November 17, 2010

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A recent article in the Wall Street Journal pointed out the necessity of careful decision-making when preparing to sell your business. As in any business venture, you’ll want to put your best foot forward and some housecleaning and careful preparation will make your business more appealing to potential buyers.

The Journal recommends experts like business brokers and merger-and-acquisition specialists to make sure you secure the best deal possible. “As a rule of thumb, businesses that post less than $1 million in annual revenues typically use a business broker; multimillion-dollar businesses often use the services of a merger-and-acquisition specialist,” says the Journal.

You should also be prepared to hand over “tax returns from the past five years, internal financial statements from the past five years, year-to-date financial information, year-to-date financial information for the year-ago period and minutes of board meetings and annual meetings (if a corporation). “

All of this information helps a potential buyer value your company and determine the risk associated with his or her investment.

According to the Journal, you’ll also most likely need to provide an accurate business history, employee roster, location review, customer base report and “listing of all owned or leased equipment.” When selling your business, it’s better to air on the side of caution when it comes to disclosure. According to the Journal, the more information you turn over in the beginning, the less likely you are to have issues later. “[Y]ou’ll help protect yourself from a lawsuit down the road.”

The piece also offers a few final tips when selling your business:

1. Do your best to make your business as profitable as possible when it’s time to sell. “After all, it’s your profits that will undoubtedly attract buyers to your business. That might require some cutbacks, such as trimming staff if need be.”

2. A confidentiality agreement before sharing this kind of information is a good idea, especially if potential buyers might also be competitors.

3. Wait until you’ve closed the deal before telling employees and customers about the change in ownership.

4. Take the time and expert advice available to ensure the most tax savings possible.

Selling your business may be a time-consuming and exhausting process, but it will be well worth it in the long run when you reap the appropriate rewards of years of hard work.

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