As a business owner, selling your company can be a daunting task. The business sales process can be time consuming, complicated, and emotionally draining.
No matter what’s motivating you to sell—finances, personal goals, family or health considerations, market conditions—there are a number of challenges every business owner will face throughout the sales process.
Let’s take a closer look at five of the top challenges of selling a business and how OIB can help you navigate them.
5 Challenges of Selling a Business
1. Determining the Value of Your Business
Determining the value of your business is crucial to a successful sale. Overvaluing the company can deter potential buyers, while undervaluing it may result in financial loss.
A business valuation can be complex, and is dependent on somewhat abstract factors like location and anticipated earnings. Evaluating your business involves a detailed assessment of cash flow, projected growth, and internal and external risk factors that help determine your company’s fair market value. Industry trends and recent comparable sales play a role in this process as well.
Engaging a business valuation expert like OIB is your best bet to get the most accurate assessment of your company’s worth.
Learn more about the business valuation process in our recent blog: Business Valuation 101.
2. Preparing for a Sale
Selling a business can be a long process, and it begins long before you put your business on the market. Preparation for a business sale should begin as soon as possible to ensure that every aspect of your business is in optimal condition to attract the buyer (and the price) you want.
First of all, your business must be able to run without you. It’s essential that you plan your exit strategy now to ensure the business can perform well under new management. You need to make sure your team is strong, competent, and ready to succeed without you. In addition, make sure your accounts are in good order and all essential documents are easy to find.
You’ll also need to prepare your financial records to ensure they’re not only accurate and up-to-date, but also easily understandable to a potential buyer. In advance of a business sale, you’ll need to prepare:
- Profit and loss statements
- Balance sheets, and
- Tax returns
Inadequate financial records can raise red flags for buyers, leading to a loss of confidence and delaying the sales process.
Ultimately, a well-prepared business is much more attractive to a buyer than one that’s put up for sale at the last minute.
So even if you think you won’t be selling your business for a while, start getting everything in order now. If your plans change and you decide not to sell, your business will be in optimal condition to bring you success for years to come.
3. Maintaining Confidentiality
Confidentiality is crucial in a business sale. Maintaining confidentiality throughout the sales process helps protect both the business and its employees. If news of the sale becomes public prematurely, it can lead to unsettled employees, lost clients or suppliers, and loss of revenue.
This leaves you with a problem when it comes to finding a buyer: it limits the marketing of your business. Trying to sell a valuable asset without being able to include all of the important details to advertise it for sale makes finding the right buyer much more difficult.
A business broker like OIB can help you discretely market your business, find the right buyer, establish confidentiality agreements with a potential buyer, and limit the premature disclosure of sensitive information.
4. Finding the Right Buyer
Identifying the right buyer for your business requires hard work and careful consideration. An ideal buyer should not only have the financial capacity to complete the transaction, but also be a good fit for the company’s culture with a clear vision for the future of the business.
But finding potential buyers (much less the right buyer) can be difficult, especially if you’re concerned with maintaining confidentiality. On your own, you can leverage your network and industry connections to find potential buyers, but that may not be enough. Finding the most appropriate buyer for your business requires a coordinated, systematic approach.
A professional business broker like OIB can help you find and vet potential buyers for your business, so you can find the right one to lead your business into the future. Plus, a business broker offers an objective viewpoint, enabling them to negotiate more effectively and ultimately get you the best possible price for your business.
5. Transition and Post-Sale Support
Relinquishing your role as owner and disengaging from the business can be one of the most difficult aspects of selling your company. Whether you’re retiring or moving on to a new phase in your career, it can be hard to let go of the business you’ve led for years.
For your own sake and that of the company’s future success, you need a smooth transition post-sale. This means providing support to the new owners for a time, helping them acclimate to the company’s culture and operations. This may include training, consulting, or temporarily assisting with the day-to-day management of the business until the new owner is ready to take over fully.
Ensuring a successful transition doesn’t just benefit the new owners: it also protects your reputation and that of the company, ensuring a promising future for the business you’ve built.
OIB Can Help You Meet the Challenges of Selling a Business
These are only a handful of the challenges inherent in selling your business. Addressing these issues and more will require careful planning, a comprehensive understanding of the sales process, and the help of a seasoned business broker like OIB.
The team at OIB can help you meet these challenges head on, maximize the value of your business, and ensure a successful sale and smooth transition.
If you’re considering selling your business this year, OIB would love to partner with you. Contact us today to discuss your needs and get your business on the market!