OCR Technology

4 Important Factors to Consider When Selling Your Business

Selling your business is a big deal. You’ve worked hard to build it from the ground up and you’ve likely invested countless unpaid hours into making it work. Regardless of how much you’ve invested in terms of time and money, if it’s time to sell, it’s time to sell.

It’s understandable if you’re eager to sell, especially when you’re crunched for time. However, before you put your business on the market, here are some considerations that can influence the outcome of your sale.

  1. Work with a broker whenever possible

Do you have the opportunity to sell your business to another company? If you’re generating interest from an organization that wants to acquire your business, you need to make sure you don’t get the short end of the stick. Hiring a professional experienced with mergers and acquisitions will go a long way to ensure your business deal is solid.

If another company is seeking to acquire your business, you need to know how to negotiate the right terms and the right price. There is no simple formula, and as such, getting it right requires a professional analysis from an expert. For example, if it’s important that the new business maintain certain practices that are central to the brand you’ve built, it needs to be included in the contract in a very specific way or it won’t be valid. If you care about how your business is run once it’s out of your hands, you’ll definitely want to consult with an M&A broker.

It’s wise to hire a broker even if you’re not looking to sell your business to an existing company, and your interested buyers are just average entrepreneurs looking for additional business opportunities. Brokers have the experience you don’t have and their expertise can save you time, money, and stress.

  1. Secure your intellectual property

It will be a strength being able to say that your intellectual property (IP) has been secured and all your paperwork is in order. If your IP is a mess, potential buyers will see the situation as an inconvenience they have to deal with themselves.

If you haven’t already, start securing and organizing your IP. Start by organizing a file with all of the NDAs you’ve had people sign over the years. Make sure these contracts are easily accessible in case the new owner needs to use them in a lawsuit.

Next, make sure you’ve filed all the proper paperwork to protect your patents, trademarks, copyrighted material, and proprietary data. While you don’t need to file any paperwork to own a copyright, only registered works are eligible to receive damages in court. It’s best to register your copyrights ahead of time just in case.

  1. Organize your finances, including your taxes

Disorganized finances are a major deterrent for potential buyers. If your business seems profitable from the outside, but that can’t be verified easily through your finances, then it turns up as a red flag to potential buyers. Disorganized finances indicate that your business may not be as profitable as you say, and that could actually be true.

Before you put your business up for sale, spend the time required to organize your finances. Make sure you have at least 7 years’ worth of tax returns available, and if you haven’t filed for some years, file those tax returns promptly. It’s possible to sell a business with unfiled tax returns, but it’s much harder this way.

It’s advised to resolve all of your financial issues before handing over your business. Your best bet is to hire a CPA to help you with your taxes and organizing your financials. They can help you identify potential discrepancies that could be a problem for you when selling your business, and they can help you get organized.

  1. Take control of your inventory

Disorganized inventory can be a nightmare for new business owners, especially when they aren’t familiar with your business. Take control of your physical inventory before selling your business. If you have a storage unit or warehouse, make sure it’s decently organized and your inventory systems are documented.

If you don’t have much inventory to manage, make sure you have clearly written documentation describing when and how you order, and what your thresholds are for ordering more items.

Is your business ready to be sold?

Is your business ready to be sold? Are your finances in order? Are you organized? Do you have employees who are willing to help the new owners get acquainted with the business to help it grow? Nobody wants to walk into a mess; make sure your buyer will be happy with what they find when ownership is transferred to them.