A Step-by-Step Approach to Selling a Business
If you’re planning to sell a business, it’s important to realize that this process usually requires more work than you think. While you may have sold a house in the past, you’ll soon find that your experience selling your business has far more components involved. Inbar Group has business brokers in New Haven CT, New Jersey, New York, Maine, Vermont, Pennsylvania and the rest of the state of Connecticut who can assist you to successfully sell your business.
Let’s take a look at some of the steps you’ll encounter along the way.
Step One –Your Strategy
Most business owners start to prepare to sell their businesses far too late. If you want to create the maximum exit value, it’s important to start planning as far in advance as you can. If you work with a business broker ahead of time, this will help you to get everything in order and adequately prepare your exit strategy.
Even if you think you know the steps you plan to take, such as selling to a family member, business brokers have years of experience and expertise to offer and will present you with strategies and tips that will help you tremendously in the long run. Whether you are looking to sell a business in Hackensack, Philadelphia, NYC, or any of the other cities we cover, an experienced Inbar Group broker can assist you.
Step Two – The Valuation
he starting point for any upcoming sales negotiation will be the valuation of your business. When a business broker conducts your valuation, he or she will take a look at a lot of detailed information before offering a price range. The broker will look to establish a price that is reasonable enough that it will attract buyers. After all, if you price your business too high for the market, there will understandably be little interest.
Step Three –The Financials
It should come as no surprise that your prospective buyers will be taking a close look at the financials. Of course, they will only want to buy a business that they deem to be profitable. As a result, you’ll need to clearly present a variety of financial information and documentation including EBITDA and revenue. For example, if your costs are high and your revenue is low, that can scare away buyers. Put yourself in the buyer’s shoes and imagine the kinds of facts you’d be looking for if you were buying a business.
Step Four – The Marketing Stage
Your business broker will then begin to prepare marketing materials to promote your business to buyers in a confidential manner. The marketing package will include a short executive summary of key information about your business. There will also be a confidential information memorandum that outlines the components of the business and why it is an attractive investment. It can take a number of months to generate interest in your company, and our business brokers in New Haven CT, New Jersey, New York, Connecticut, Maine, Vermont and Pennsylvania will work to help you find interested investors.
Step Five – Qualifying Buyers
Your business broker will ensure that your prospective buyers are actually qualified buyers before moving forward and potentially wasting your time and energy. A qualified buyer will have the financials necessary to purchase your business. If your buyers are not properly vetted ahead of time, it could result in a deal falling through at the last minute.
Step Six – Letter of Intent
Interested buyers will then present you with a Letter of Intent (LOI). You and your business broker will then evaluate this document to ensure it meets your goals.
Step Seven – The Negotiation
Once you have approved the LOI, the next stage is negotiation. At this stage of the process, having a business broker working on your behalf is critical. Business brokers have the required expertise to ensure that deals stay on track. Your buyer will also have a representative working on their behalf to make sure their interests are met as well.
Step Eight– The Closing
At this final step, the purchase agreement has been approved by both parties and a closing date is established. You and the buyers will sign paperwork and the funds will be wired. Congratulations! Your business now has been successfully sold.
As stated above, we have can help you sell a business in Hackensack, New Haven, Philadelphia, New York City or numerous other cities located in New Jersey, New York, Maine, Vermont, Pennsylvania, and Connecticut. If you have any questions about the steps outlined below, please give Inbar Group a call at 212-473-5000. Whether you are in the preparation stages or ready to sell your business, our team of experienced brokers can help you through the process.