There might come a point in your life when you will need to sell off your business, the reasons could be numerous. It’s definitely not a one night call and a lot of considerations goes into making it a profitable sale.
Here are certain points to keep in mind in the time frame of the decision to calling it quits and actually handing over the stake.
1. It is important to keep all the financial documents in order, especially the last three years, the buyer will definitely be interested in that. If the accounts are kept audited then it’s an added benefit.
2. All the paperwork especially the agreements with customers and suppliers should be up to date.
3. The business can be made to look lucrative if the tricks of the trade are passed on to the customers, suppliers and stakeholders before the sale.
4. The employment contracts and the incentive packages should be kept updated, documentation of all the policies, systems and processes intact to ensure a smooth transition.
5. It’s important to renew the lease of the premises if the business operates from such a place and reduce the working capital requirements by gradual removal of debtors.
6. A tax advice needed to be sought to eliminate any hindrance to the deal.
To estimate the business worth:
It is advisable to look for a competitive market when planning to sell unless otherwise. A buyer looks at a company’s present earnings as well as its assets or forecasts. So if you can portray a good growth potential a higher price can be quoted.
What exactly are you planning to sell?
A business comprises of stocks, debtors and fixed assets. You need to confirm what exactly is your point of sale because this selection may be driven by tax reasons. For example if one wants to sell off equities then you need to offer warranties as well.
Have you identified your target buyer?
The buyers could range from an owner operator, a private equity firm or a listed company. The priorities differ as per the category. While a listed firm will look for detailed accounting matching with the industry standards the private firm might just want some amount of commitment from the buyer.
The payment procedure needs to to be finalised, whether you want it in full cash, scrip or a combination and whether you need to be paid fully upfront or instalments depending upon the company’s performance. The most importance transfer is the goodwill. It is therefore recommended to keep the same vendors and contacts of the company for a minimum period of time after the sale to acquire knowledge. The balance-sheet should include a very detailed analysis of the company’s debtors, provisions, fixed assets and stocks.
To conclude the main points to remember would be a very updated financial reporting, a well detailed customer contract and an advanced marketing plan to go ahead with a smooth and satisfying sale.
For more details please visit at http://businesshunters.co.za/
