Entering the sales process requires a clear understanding of expectations from both sides—seller and buyer. Here, we outline key considerations for business owners before, during, and after a sale to optimize value.
Before the Sale
Prior to initiating the sale, regardless of business size, it’s crucial to identify selling motivations and priorities. Are you aiming for a cash sale or open to equity? Do you intend to safeguard family or long-term staff positions? Address such questions before embarking on the process.
Secure a trusted advisor with relevant experience to navigate potential conflicts of interest. This advisory team could include an accountant, tax expert, legal counsel, appraiser, valuation expert, investment banker, and broker.
Collaborate with your team to grasp the sales process intricacies beforehand, enabling informed decisions throughout.
Consider undertaking pre-due diligence to be well-prepared for potential buyer scrutiny.
The Sale
Selling a business entails a time-intensive process. Anticipate a span of six months to a year. Ensure business operations remain unaffected throughout the sale, as your involvement may be stretched. Building a capable team helps manage this load, preventing business disruption and potential price reduction.
The buyer typically presents a letter of intent, detailing sale terms. This serves as a foundation for negotiations and eventual legal agreements.
Factor in a transition period. Will you facilitate the handover? Negotiate these terms. If not, clarify business transfer and employee communication.
After the Sale
Post-sale, your role doesn’t cease immediately. Key employees may receive contracts, including incentives tied to post-sale business performance.
Non-compete clauses are common in sale contracts, constraining your ability to compete in specific regions or industries.
Selling a business is intricate; legal and financial aspects are multifaceted. As a business owner, consult experienced professionals and take time to educate yourself before proceeding.
Venture Corporate Finance specializes in middle-market M&A advisory, aiding clients in sales, capital raising, restructuring, and acquisitions. Tailored advice and transaction solutions drive specific objectives.
For details on corporate finance and M&A services, reach out to Venture Corporate Finance.
