3 Things You Need to Do Before Selling your Business
Do you plan to sell your business? It is bound to be a tough transaction, but you must see it through. With that said, in the following we are going to mention a few important things you must do before you sell your business. These are a few common mistakes people make, so make sure you avoid them!
1. Decide Your Mindset
The most difficult part of selling a business is letting go. It’s the act of losing the very thing you made to stand. An effective way to make this transition easier is getting your money in order. The investor might dig deep in your finances, so you better give accurate financial projections as a part of your exit strategy.
Come up with Pro Forma Statement at both summary and detailed level. You need supporting schedules for asset and liability accounts.
You will also need to showcase the systems you created to run the business. If you want to get a better deal, then you need to showcase the systems you used or developed to generate revue and manage the administrative side of things. It’s a time absorbing process, but it will pay off!
2. Make the Buyer Confident in Their Purchase
When you plan on selling a business, you must be mentally and financially prepared to leave your position. Draw a line whether the acquirer is buying only the company, only you, or both. If the acquirer wants the company only, then you have to set plans in motion to remove yourself from all critical roles.
If you are going to stay in your position after selling, then you have to prepare yourself and the company for some drastic changes. Yes, your company culture won’t remain the same. Most investors don’t invest in intellectual property; they are looking to acquire the people who built the IP as well. So as the one who founded and create the business, you must showcase your talents.
You need to sell yourself to make the investing party confident their investment won’t fall apart shortly after they have made the transaction
3. Take Care of the Legal Mess
The only thing harder than setting up a business is selling it once everything is in place. This is a hard decision, but you have to keep emotions out of it. You don’t need to prove you put blood, sweat, and tears into everything. Its hard but a worthy transaction.
This will help your being fair and keeping a collaborative approach. You need a strong relation with the acquisition party. So you better be open, transparent and focused on creating value for both sides. If needed, hire a lawyer to take care of the legal issues.
It’s possible you don’t know of the legal hurdles, so hire someone who will point everything out. If you don’t do this, you might get yourself into trouble with a clause or condition.