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 financial situation.
- 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.