The process of selling a business may be quite difficult. Selling a business successfully takes time and effort. Regardless of the cause for your sale, the objective is usually the same: to get the best price and sell your company as soon as feasible.
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Small business sales can take anywhere from six to nine months on average due to the complexity of the process, and many of them don’t close. Since their businesses account for 80–90% of their net worth, many small company owners are quite vulnerable. For the owner, any delay in the selling process might cause logistical and financial problems.
It’s critical to understand the first steps in the process if you want to sell your company as soon as feasible. If you have the appropriate consultants around you, you can ensure that your firm sells reasonably fast and for the greatest price by knowing the selling process and creating a sound plan. We’ve included five methods for selling your company as soon as feasible below.
How quickly can I sell my company?
Regarding how long the selling process will take, there is no hard and fast rule. Numerous variables are involved, such as your company’s size and profitability, the state of the economy, and the buyer’s finance. Smaller companies tend to sell more quickly than bigger ones since there are less moving parts. However, that does not preclude delays.
Having said that, the majority of companies that do wind up selling do so within a year of becoming public. It could be necessary for you to be ready to accept a lower price if you’re hoping to sell quickly. If you’re not in a hurry to sell, you might also try to locate a buyer who is prepared to pay more for a turnkey, operational firm.
Working with consultants like Baton as soon as possible and arranging the information required for due diligence can help you expedite the selling process.
How long does the average firm sale take?
The majority of business owners are unaware of how long it will actually take to sell their firm. Finding a buyer who is interested in your company is necessary after you decide to sell. Weeks or even months may pass during this. Once a potential buyer has been identified, you will need to settle on conditions and negotiate a sales price. This may need some time as well.
Once a buyer has been identified, the closing process—which involves the buyer raising the required monies and reviewing all accounting and financial documents—can take several weeks or even months. Be ready for this procedure to take several months, since it is comparable to the period required to sell a house.
Step 1: Get Your Company Ready for a Sale
Being ready is the first step towards selling your company swiftly. Make sure all of your paperwork is in order first. This comprises your articles of incorporation, financial documents, any necessary licenses or permissions, and other tax records. Having everything organized can facilitate the sale process and assist to guarantee that the buyer can start using the business right away.
Next, examine your finances closely. Factors like as yearly income, profit margins, and ongoing debts will be of interest to buyers. It would be wise to seek expert assistance right now if you are unsure about the state of your company.
Additionally, you should create a plan for marketing your company to possible customers. This comprises a strategy for identifying potential customers and a method for pre-screening them so you don’t waste time pursuing unsuitable customers. Working with an adviser is another option.
Step 2: Establish your company’s worth
The process of assessing a company’s assets and finances to determine what the company would be worth to an outside buyer is known as “business appraisal” or “business valuation.” Successful (and speedy) business sales depend on matching your value estimates to what a buyer is prepared to pay. Knowing how other people will see your company is a terrific place to start if you’re thinking about selling.
Moreover, a wonderful method to raise the value of your company is to have a thorough awareness of how people determine the worth of your enterprise. When the time comes to sell, you might be able to significantly raise the value of your company by concentrating on the appropriate KPIs beforehand. The amount of earnings your firm is making, the worth of its assets, intangibles like your brand and reputation, and the sector it operates in are all taken into account when valuing your business.
You have several options for determining the worth of your company. Examining your company’s assets and liabilities is one popular strategy. This will help you determine the true value of your company, but it doesn’t account for items like intellectual property. An alternative strategy is to examine similar companies in your sector. This might help you get a solid notion of the price range that potential customers may be prepared to spend for your company. Seek further information by consulting our guide on company valuation.
Step 3: Select a platform to list your company on in order to attract potential customers.
You may sell your company on a variety of small business markets, including this one. You might want to check into industry-specific resources to list your firm if it operates in a particular market.
When choose the platform to list your company on, think about the kind of customers you want to attract. Are you trying to find strategic buyers that would be willing to acquire your company so you may grow into new markets? Or are you trying to find investors that will only be interested in purchasing your company at its highest possible value? You may start to reduce your alternatives after you have a clear idea of the kind of buyers you want to work with.
Next, think about the kind of transaction you want to make. Are you interested in a partial sale or are you wanting to sell your company entirely? Finally, think about your schedule. Do you want to sell your company right now, or are you able to hold out for the best offer? Selecting the platform that best fits your demands will be made easier if you are aware of your timetable.
Step 4: Streamline your financial procedures and accounting documents
Verify the accuracy of your financial accounts and records if you’re considering selling your company. Being able to sell your company requires having a strong financial position, which is something that potential buyers will actively seek for.
Examine your financial statements carefully. Are they current? Do they fairly depict your earnings and outlays? If not, this is the moment to make the required adjustments. Additionally, you should guarantee that all of your financial documentation is readily available and well-organized. Things like profit and loss statements, tax reports, and bank statements are what buyers will want to see. Additionally, you should make sure that you have the necessary paperwork available, such as the yearly business planning and budgeting documents, the cash flow forecasting documents, the industry benchmarks and analytics, and any other dashboards or KPIs.
Important business operating papers, such as process documentation, employment agreements, organization charts, procedure manuals, and more, should also be reviewed by buyers. Having these paperwork available in advance helps expedite the process and save you time from having to look for information after the selling process has started.
To obtain a professional perspective on your financial statement, you might choose to speak with an accountant, bookkeeper, or financial adviser. Before you put your company up for sale, they can assist you discover any areas that may require improvement and help you clean up your finances. You can be sure that you’re showing your company in the best possible light by following these measures, which will increase its appeal to potential customers.
Conclusion
While there are several ways to sell your company fast, it’s crucial to keep in mind that hurrying the process can cause you to lose out on potential revenue.
You’ll be in a far better position to earn top cash for your firm if you take the time to prepare it for sale, assess its worth, and choose the best marketing platform.
Baton is available to assist you whenever you’re prepared to make that move. In order to assist you in determining if the moment is right to sell, we give free company appraisals. We also offer advice on how to optimize your valuation. Start now to find out how much your company may be valued later.