What to consider before selling your company

Contents

Not all businesses are created equal. Some are made for a good cause. Often it’s connoted that if a business is sold or absorbed by other companies it means failure. But in the new commercial era, acquired companies are being recognized as an effective means of management. Promising businesses are expected to grow and honestly, it requires a lot for it to be realized.
That’s why the idea of selling is adapted by trade founders to obtain funds, continue their legacy (even if it means surrendering ownership) and use the money for investing into new projects.

In other cases, the acquisition of a company has been recognized as an advantage due to the shortened period of time it takes for business development. In particular, venturing companies regard the goal of selling to launch interest from possible investors who highly views what a company would be if they bought it for a price. Plus they can boast about their success. It’s a win-win situation for everyone right?

But some can be unsuccessful in their attempts to do so. Without a thorough planning and preparation beforehand, you may find yourself ditched in an alley somewhere with nothing to show for.So the manner of organizing your business affairs comes first before even considering sale.

Undoubtedly the basic reason for selling is profit. However, it must be kept in mind that the value of your company must not be compromised should it attract the buyer’s attention. In order to sell your business wisely, you must prepare:

4 Organizational Tips for Business before selling

1. Have a scheduled timeframe for transfer

2. Maintain records and performance adjustments

3.Clear off suspicious transactions

4. Prioritize the conditions of selling your company

1. Have a scheduled timeframe for transfer

The agreed date should be determined in advance. You can’t just wake up one day and decide to sell your company next month. Successful sellout takes years to be fully implemented. This might take a while to wrap your head into. Be resolved beforehand that this is a hard assignment. With so many things to do and so little time, you need to strap your suit and get down to business proper. There are 2 things to evaluate: 1. Internal environment or the ability of your business to generate profit and 2. External environment or the momentum of the market. These two are largely related and must coincide with the timeframe of transfer. This is your main guide because the reality of transfer might not work perfectly as planned out.

Knowing how to sell is one thing and knowing when to sell is another thing.

2. Maintain records and performance adjustments

How much are you earning at this point? How much is your net worth? You have to know this things because it’s the most important perspective buyers look at. Earnings are not just about current sales and profit. Evaluation varies greatly depending on the “actual growth” moreover whether there’s “potential growth” in the future.

Think tightly about medium-term sales and profit plan your management has to focus on to convince investors and reset their expectations.

3.Clear off suspicious transactions

When you transfer a business to a 3rd party, it also becomes important that there’s no fraudulent activities and transactions happening underground. Always keep a clean record of balance sheet and income statement that doesn’t contradict any laws and regulations. Develop a habit of updating it constantly so that in the long run, it won’t be so hard presenting accurate paperworks. If there’s even a slight hint of tax evasion, the buyer can decline. Resolve any issues before the sale.

Consult with tax accountants for counsel about such matters.

4. Prioritize the conditions of selling your company

What’s more important to you, the condition of your company or the sales it generate? Are your funds enough before you proceed to the transfer? How much will it cost you overall?

Assessing your economic conditions is the most realistic and practical way to go over it. There can be a lot of reasons for selling nevertheless you must also be apprehensive about the welfare of your employees and instill the form of security they must get should the new management take over. Your personal intentions must be within the bounds of ethical and moral dispositions. Don’t be too preoccupied with “accessorizing” that you forget the content value.

Negotiations will proceed smoothly if your business not just look good but feel good on the inside.

It’s understandable that preparations are overwhelming in the process. The idea of M&A is a lot to digest but the gap of unpreparedness can take you off guard. It might even lead to certain consequences and loss. So carefully plan each step and we recommend that you consult with an expert for more information.