Every business owner’s exit strategy is to eventually sell their business. One thing is to be an expert with what your business does and it’s a completely different process on how to sell your business.
Tempus has identified seven (7) steps that goes into selling a business. You could write a 300-page book just on each step but let us understand the big picture:
- Organizing Your Business Financials and Documentation
In order to properly value your business and sell it, you need to have all your financials updated and in proper order. Think about it: If you were a buyer, would you buy a business that has sloppy financials? The financials and documentation does not have to be perfect but it needs to be presentable.
- Determine the Business Purchase Price
In order to properly determine the purchase price of your business, you need to have at least your last 3 years tax returns, financials and Year-to-Date Profit and Loss. With this documentation, you can begin the process of a financial recast which ultimately gives the purchase price.
- Creating a 15-25 page Confidential Executive Memorandum (“CESM”)
Think of the CESM as the packaging of a product, food label or business plan. The CESM is the document that gives the prospective buyer enough information to determine if they want to take the next step and meet with the Seller. The CESM is absolutely critical in selling a business. Remember, you only have one shot at a good impression.
- Find A Buyer
No Buyer, no sale. Knowing where to find the right buyers and how to approach them is more art than science. A buyer could be your competition or in Australia. With today’s global technology the pool of potential buyers has grown. Many internet platforms exist to “find” buyers. But beware of the tire kicker.
- Negotiate & Sign the Letter of Intent or Purchase Agreement
Once you an interested Buyer, the nest step is to negotiate the terms of the deal. The 2 most common documents that memorialize the terms is either a letter of intent (“LOI”) or Purchase Agreement (Stock or Asset).
- Conduct Due Diligence
Once the LOI or Purchase Agreement has been signed, you begin the next phase which is Due Diligence. This is a fancy term for simply getting all the financial and company documentation available to review it and make sure everything checks out. This is the most common step where deals fall apart. Preparation and cooperation are key.
- Closing the Deal
The happiest day is the Closing day (so we think). This is the day that the Seller, Buyer, Business Brokers, Bankers and Attorneys all get together in one room (or virtually) and sign all the Closing documents to effectuate the transaction. Once the ink dries, the “keys” to the business pass to the new owner and the Seller will have their money wired to their business operating account.
So, there it is, the #7 Steps to Selling Your Business. Easy to read, hard to execute.
We highly recommend that business owners hire specialists to assist in selling their business.
Specialists include Business Brokers, Business Intermediaries, Business Attorneys and Accountants.
If you are looking to sell your business, contact us for a free and confidential consultation.
All too often we see business owners try to sell their own business but make the mistake of undervaluing their company with detrimental terms. Don’t make that mistake!
Authored By:
Gil Sanchez, Esq.
Founder & CEO of Tempus Business Strategists, LLC
gil@tempusbusiness.com
Tempus Business Strategists, LLC (“Tempus”) is a Florida Licensed Real Estate Brokerage (License #: CQ1051910). Tempus is a Member of the Business Brokers of Florida (“BBF”), International Business Brokers Association (“IBBA”) and Alliance of Merger & Acquisition Advisors (“AMAA”).
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About Tempus
Tempus #1 goal is to represent Florida business owners in selling their business for as much and as quickly as possible. We sell businesses from all industries. Deal size ranges from $50,000.00 to $20,000,000.00.
We also assist buyers to acquire businesses, business consulting and valuation opinions.
We market our listings confidentially to people and companies in the U.S. and around the world.
All buyers are required to sign Confidentiality Agreements and provide their own personal financial statements.
Our business brokers and business intermediaries will assist in providing a business valuation opinion, guide buyers for financing and take a listing from listing to close.
No upfront cost to hire us. We are paid only if we sell your business.
Contact us now for a free phone or in person consultation. 844-509-5778.
Tempus Business Strategists, LLC (“Tempus”) is a Florida Licensed Real Estate Brokerage (License #: CQ1051910). Tempus is a Member of the Business Brokers of Florida (“BBF”), International Business Brokers Association (“IBBA”) and Alliance of Merger & Acquisition Advisors (“AMAA”).
