| Step 1.) Preparation - No matter how small or | | | | small businesses find their buyer through paid |
| simple your business is, you will have to do some | | | | advertising, some have had success asking their |
| preparation to make sure the business is ready to | | | | banker, accountant, lawyer or other advisers for |
| be seen by buyers. However, avoid the trap of | | | | referrals. |
| over-preparing - waiting until every last detail is | | | | However you market your business, you should |
| perfect before looking for a buyer. Things will | | | | always do all you can to maintain your |
| never be perfect. | | | | confidentiality. It is best if your employees, |
| Begin your preparation by gathering or creating all | | | | suppliers and customers don't know the business |
| of those things that will need to be put on paper. | | | | is for sale until it is sold. In all your advertising, be |
| If you don't already have them, start by | | | | careful not to use your company name or to |
| preparing neat and professional looking Financial | | | | provide information that is too detailed. Also, |
| Statements. Buyers want to see, in writing, how | | | | make sure that prospects can respond to your |
| your business has performed. You may also need | | | | ads at an e-mail address or phone number that is |
| to create a set of Recast Financials where you | | | | not connected to your business. |
| add back to the bottom line all those benefits you | | | | In order to protect your confidentiality, you should |
| took out of the business (company car, spouse's | | | | require all prospects to sign a Nondisclosure |
| salary, travel expenses etc.). | | | | Agreement before you provide them with any |
| Next, you will want to gather up all your | | | | detailed information about your business. |
| important documents and agreements: contracts | | | | Step 4.) Structure The Sale For Maximum Benefit |
| with suppliers and customers, leases, titles to real | | | | - Throughout this entire process of meeting and |
| estate etc. If your lease is about to expire, talk | | | | qualifying buyers, your goal will be to identify your |
| to your landlord now about an extension. | | | | best prospect and have them sign a Letter Of |
| Next, you will want to devote some time to | | | | Intent. The Letter Of Intent is an agreement in |
| Physical Preparation required for selling your | | | | principle that you and the buyer have agreed on |
| business. Without going into a full scale makeover | | | | the most important aspects of the sale and the |
| you want to make sure your parking lot, office | | | | buyer will in fact buy the business if all the details |
| space, warehouse etc. make the best possible | | | | can be worked out. |
| first impression. Inventory, vehicles and machinery | | | | "Structuring The Sale" is the process of working |
| should all be inspected by you ahead of time so | | | | out all those details. In most sales this phase will |
| they are ready to be inspected by the buyer. | | | | focus mainly on the financing. Other agreements |
| Step 2.) Determine The Value Of Your Business - | | | | may need to be reached concerning noncompete |
| Contrary to popular belief, there is no universally | | | | clauses, consulting agreements or the status of |
| accepted formula that will give you an definitive | | | | employees. |
| asking price for your business. For every business | | | | Step 5.) Due Diligence - The term "due diligence" |
| there are unique circumstances (both positive and | | | | refers to the period during which the buyer has |
| negative) that will influence the actual selling price. | | | | the opportunity to investigate the business |
| So a formula can only take you so far. But, a | | | | completely. The buyer can fully research the |
| realistic valuation will allow you to justify your | | | | company's financial statements, inventory, |
| asking price to the buyer and put you in a | | | | contracts etc. in order to confirm all the claims |
| stronger position to negotiate. | | | | made by the owner during the selling process. |
| Step 3.) Locate And Pre-qualify Buyers - Once | | | | Step 6.) Close The Sale Quickly - At this point |
| you have prepared the business (both physically | | | | your lawyer will handle much of the work such as |
| and on paper) and have determined a realistic | | | | drawing up the sales agreement and getting all the |
| price range, you are now ready to look for | | | | document signed. A sale can still fall through at |
| qualified buyers. | | | | this late stage. But if you have performed steps 1 |
| These days most sellers advertise their business | | | | through 5 diligently, you will eliminate most |
| for sale on the Internet. You may also decide to | | | | roadblocks that can arise at this late stage. |
| run ads in newspapers or magazines. While most | | | | |