Developing a business from a modest start to the point where it boasts an impressive dollar value requires significant time, effort, and soul. After pouring their blood, sweat, and tears into the company, many small business owners see selling off their company as selling off a part of themselves.
A momentous step for any business, entrepreneurs typically spend hours and hours agonizing over whether to sell their company before reaching a final conclusion. This time expended is reasonable, as there are just so many uncertainties when it comes to such significant business transactions.
5 Things to Consider Before You Sell Off Your Company
Make no mistake, selling a business is not an easy process, as you will need to learn how to sever the emotional bond you have built with your company. This transaction will need to be approached critically in order for it to truly see success. However, the rewards can be abundant and even life-changing.
If you do ultimately decide to sell, there are several things you will need to be aware of to help you prepare for the sale and maximize your odds of success. Here is what you should know before you sell off your next business:
Is Your Business’s Valuation Based on Profits or Potential?
Remember, buyers are not interested in potential. There is little value in concepts that do not have an established revenue stream. If a buyer were interested in building a business from the ground up, they would not be searching for an already established company, as there are a multitude of resources they could utilize to develop their own business. Most buyers want to procure businesses that have already proven fruitful rather than roll the dice on unproven concepts.
Are Your Financial Claims Verifiable?
If you are planning on claiming revenue from a specific source, you will need to have verifiable evidence. Make sure you have invoices, bank statements, and matching deposits ready to back up your financial claims. If your business generates income through affiliates or third parties, be prepared to show deposit histories and other confirmable documentation.
Is Your Business Still Successful?
Former achievements of a business are generally irrelevant at the time of sale, particularly if the business is currently undergoing more challenging times. Buyers usually only care about the current performance of a business. Typically, buyers will only review financials and achievements within the last year as they are not generally interested in repairing another person’s recovering business.
Have You Been Completely Honest About Your Company?
Honesty is always the best policy, especially when it comes to complex business transactions, because the truth will always find its way to the surface. Be upfront and truthful about everything, even the less than positive details. Experienced investors understand that all businesses have ups and downs and that there is no such thing as a faultless business.
Are You Prepared to Answer an Abundance of Questions About Your Business?
Before selling your company, make sure you know your business backward and forward. When you sell a business yourself, there will be a lot of questions, and you will need to be prepared to answer every one of them if you are serious about finding the right buyer.
Selling Your Company? Contact an Experienced Business Attorney in Pleasant Grove
Are you considering selling your business? Attorney Jeffrey Cardon has worked with a multitude of business owners throughout Utah, and he understands that choosing to sell your company is never an easy decision. Still, when done correctly, the rewards can be immense.
To prevent hiccups and ensure a smooth process, it is crucial to obtain sophisticated, accurate, and comprehensive legal counsel to protect your interests during the transaction. At Cardon Law, our clients benefit from having a first-rate legal resource on their side from the beginning of the sales process to the end. Call (801) 225-6700 or submit a completed contact form to learn more about how Attorney Jeffrey Cardon can serve you.