What You Should Know Before Listing Your Business For Sale
You’ve spent countless hours, invested thousands, and worked hard to build the business of your
dreams. While building a successful company is an accomplishment in itself, your true success lies in the sale. Listing your business for sale is perhaps the most important aspect of any entrepreneur’s endeavor, and can often times make or break the individual’s success. A solid, profitable company with a positive reputation is certainly going to sell, but knowing how to handle the sale of your company will have a huge impact on your bottom line.
Preparation is the key to listing your business for sale. You may think your company is ready to be turned over as is, but there are a few things that you can do to not only catch the eye of a better prospect, but ready yourself for the eventual sale, as well.
Before Listing Your Business For Sale
1. Organize Your Records
Before you even think about selling your company, your financial records need to be in order and assessed. This should be done at least a year prior to listing your business for sale. Audit your financial statements, and scrutinize your projections to ensure that your potential investors have an accurate depiction of your company’s responsibilities, income, and potential for growth.
2. Forgo The Friendly Client Relationships
No doubt, as your business grew and new clients were retained, you built special relationships with some of your customers. Do not expect these relationships to carry over to the new owner, and don’t lead your clients to believe that will be the case. A new owner has no interest in your personal interests, and will not be pleased if they feel they are expected to. Make your clients aware of the pending transition, and let them know that any special relationship you held with them will likely not continue when new ownership takes over.
3. Review Your Current Contracts
This applies to both your supplier contracts, your client contracts, and any applicable leases. Ensure that nothing will lapse or expire when new ownership takes over. The last thing an investor wants to do is renegotiate new contracts while learning the ropes of their new company. Before listing your business for sale, take one last look at your contracts, and renew or renegotiate what you can before you accept an offer. Anything that is not renewed when your business goes to sale, should be made clear to any prospective investors.
4. Enlighten Your Employees - Before Listing Your Business For Sale
A crucial mistake many business owners make is waiting until the day the company switches hands to let employees know about the new ownership. This is a big mistake for two reason: first, your key employees were expected to be retained in the sale, and if they don’t stick around after the transition, your buyer is not going to be please. Second, and perhaps more important, is that your employees deserve to be respected. Keeping them in the dark about your plans of listing your business for sale for too long in unfair. Give them a chance to make up their mind before the sale takes place, so that everyone can end or continue on their own terms. This way, there’s no question to your buyer who will be staying and who will be leaving, and your employees won’t feel as though they were part of the property being sold.
