How To Sell Your Business for Maximum Profit
Even if you have just started a business or are currently enjoying maximum profitability, the day will come when you will want to sell your business. Without a good exit strategy in place, you may ultimately be left with a tremendous amount of money on the table instead of in your pocket. Don’t let that happen to you. An M&A advisor can help you prepare and execute a solid exit strategy now that will one day lead to a profitable and expedited sale.
Your Exit Strategy
Most likely, you will never know the exact date you will sell your business. Your M&A advisor will help you write a good exit strategy that encompasses sale scenarios from different angles is. Ideally you will sell your business when profits are up. However, unforeseen events could one day force you to sell during less than favorable conditions like a downturn in business, health issues, or a change in marital status. The good news is that if you prepare in advance, you’ll be ahead of the game, even if the circumstances are less than ideal.
There are a lot of decisions you’ll have to make when you retire, and now is a good time to start to consider them. For example, you might want to think about whether you would want to remain with the new owner(s) to help facilitate a smoother transition and what the terms of that agreement might look like. Also, give some thought to how you will be using your free time after selling your business and how that could look financially. You’ll also want to start working with a CPA firm that can help you understand the best way to handle different tax scenarios.
Try to view your business from a buyer’s point of view. Do your profit and loss statements match your balance sheet and tax returns? Is the physical state of your facility in good shape or does it need repairs or upgrade? Create a budget and timeline for any necessary upkeep, repairs or remodeling that will need to be done in order to ensure top dollar when you sell.
The People Perspective
Your business most likely impacts a variety of other people, including customers and your staff. It’s also useful to think about actions and decisions you’ll make that involve others.
- Will your employees be kept on or given a severance package?
- What would your customers or clients say about the business?
- What issues might arise with partners, stockholders, landlords or vendors?
Preparation is Key
Your M&A advisor can help you lay out a plan that accounts for various sale scenarios. He or she will also help line up the accountants and attorneys you will need and help you review contracts, leases and other agreements that will affect the sale. The purpose of your exit strategy is to apply a bit of effort every day in the right direction. Through this means, you’ll achieve maximum profits for minimum effort when the time comes to sell your business.
Michael J Schwantes is President & CEO of Creative Business Services/CBS-Global.
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