What is one thing I should not forget to do when trying to sell my business?
The following answers are provided by the Young Entrepreneur Council (YEC) is an invite-only organization comprised of the world's most promising young entrepreneurs. In partnership with Citi, YEC recently launched StartupCollective, a free virtual mentorship program that helps millions of entrepreneurs start and grow businesses.
A. Get Your Finances in Order
A potential buyer will dig deep into your finances, so providing accurate financial projections is an essential step in the exit process. You'll need to prepare pro forma statements at both a summary and detailed level. You'll also need to have supporting schedules for all of your asset and liability accounts as well as supporting documentation for your revenue and expense accounts.
- David Ehrenberg, Early Growth Financial Services
A. Share Your Enthusiasm
Potential buyers are leery of your reason for selling your business, and they spend a lot of time digging to determine why you're selling. Although that is to be expected, you can help ease their concerns by sharing your enthusiasm for the business and its future prospects. Your enthusiasm for the business will resonate with your buyer and may be the difference between selling and not selling.
- Fehzan Ali, Adscend Media LLC
A. Sell Your Systems
Showcase the systems you created to run your business. In addition to selling the business properly, having systems that can generate revenue and manage the administrative side of your business will increase its value.
- Kelly Azevedo, She's Got Systems
A. Determine the Best Way to Finance the Sale
How the purchase is financed is just as important as the purchase price. You might be better off taking a lower purchase price with all the money paid at closing than providing seller financing for a higher purchase price. We have often seen frustrated sellers who are stuck trying decide whether they should litigate over nonpayments. A bird in the hand is definitely worth two in the bush.
- Doug Bend, Bend Law Group, PC
A. Prepare to Leave Your Position
When preparing to sell your business, you have to understand whether the acquirer is buying the company, you or both. If the acquirer wants the company, start planning now to remove yourself from all critical roles. If you are going to stay on post acquisition, prepare a plan B in case a drastic change in culture makes staying no longer worth it. Ultimately, prepare to no longer be the boss!
- Mark Cenicola, BannerView.com
A. Showcase Your Talent
Companies don't want to simply buy intellectual property these days; they want to invest in the people who built the IP as well. Selling your talent equally will give the purchasing company confidence that what it buys will not fall apart after the deal is closed.
- Phil Chen, Givit
A. Focus on Recent Transactions
When trying to sell my business, I would look to do a full M&A analysis of recent transactions that are comparable to my business. Moreover, I would look to employ a reputable investment bank or business broker to represent my business in a transaction because I know I'll be busy focusing on my business' day-to-day affairs. This will ensure I get the greatest value for the business I created.
- Bobby Grajewski, Edison Nation Medical
A. Keep Emotions Out
It's hard to do, if not impossible. Entrepreneurs put heart, sweat and tears into their businesses. It's hard, but worth it, to separate emotions from the decision process. Focus on being fair, and have a collaborative approach. You'll want to have a relationship with the acquirers moving forward, so focus on being open, transparent and creating value for both sides. Congrats if you sell!
- Mitch Gordon, Go Overseas
A. Hire a Lawyer
At the end of the day, you don't know what you don't know. You need to have a really good lawyer to point out the pitfalls, or you could be screwing yourself over in the long term with clauses or conditions that actually favor the buyer.
- Eric Siu, Single Grain