While the rewards of
selling your business can be great and ultimately life-changing, the process of doing so is
far from simple. From finding the right buyer to facilitating a smooth
transfer of power and ownership from one party to the next, selling a
business involves several moving parts which must all come together in
just the right fashion to avoid various pitfalls. Fortunately, sellers
who do their homework ahead of time can better prepare for what lies ahead
and maximize their chances of a successful transaction.
If you are considering selling your business, be mindful of the following:
Potential does not equal value: Many sellers demand a high selling price simply based on their business’
potential. Unfortunately, most knowledgeable buyers will not see your
business’ potential as an indicator of its present value. If your
business is simply a concept without a proven history of success or steady
revenue, you may want to hold onto it longer and further develop it before
selling. Remember, buyers are looking for a business that is already established,
not a risky concept that has yet to prove its worth.
Profits trump revenue: Many sellers believe that buyers will be impressed with high revenue figures.
While this is important, buyers worth their salt will be far more concerned
with profits. For example, a business with $10,000 in monthly revenue
and $1,000 in monthly expenses will be far more attractive than one which
brings in $30,000 but spends $25,000 per month.
You should be able to verify your claims: Claim you receive revenue from a specific source? You had better have concrete
proof. Deposit records, invoices, bank statements, and other records will
all be necessary to show buyers a clear picture of your company’s
Past successes do not count: While your business may have been a roaring success in years past, your
most recent performance will be a far more telling indicator of your business’
future and its appeal to buyers. Five years of healthy growth will mean
little to a potential buyer if your business has taken a nosedive over
the past 12 months.
Be honest: Since the truth will always get out at some point, it is best to be upfront
from the get-go. Investors understand that there is no such thing as a
perfect business. If you are transparent from the start regarding your
business’ struggles, there will be a much lower chance that your
deal will fall through because the buyer uncovered some inconsistency
or hidden truth.
Sell Your Business with Buckley Beal LLP
In addition to the above tips, retaining the services of an experienced
attorney is one of the most effective ways to help facilitate a smooth
transaction and eliminate the guesswork of selling your business. At Buckley
Beal LLP, our award-winning
Atlanta business litigations attorneys can walk you step-by-step through the associated legal processes and ensure
your best interests are protected.
Find out more about what our 85+ years of combined experience can do for
you by calling our office today at (404) 913-7415.