Thinking, how do you sell a business? There are a ways to follow that are essential for an optimal result. This topic is already covered in our post on business sales and steps to follow in the process.
The process to sell a business follows this scheme:
1. Make the decision
2. Review the structure of the company
3. Commission a professional the valuation of companies
4. Look for the buyer and
5. Sign a confidentiality contract
They are fundamental steps and once the first three are completed, the most delicate step of all comes: finding a buyer. Why is it so delicate? Well, because at this moment the “dirty game” can begin: many competitors will be aware of how to get hold of your customers if they find out that you want to sell. And of course, this doesn’t interest you.
Confidentiality When Looking for A Buyer
Knowing your company, clients and competitors does not imply that you know how to find a buyer for your business. Nor how to do it with confidence and without taking risks. It is best to hire the services of an experienced business valuation consultancy to take care of it. And I will explain the reasons:
The professional in charge of searching for the buyer and negotiating approaches the possible interested parties without falling into the trap of providing information that could lead your competitors to your clients.
If your clients find out that you are going to sell your business, they will look for new suppliers as soon as possible.
That is why confidentiality is so important at this point in the negotiations.
The 3 Key Factors for a Safe Sales Process
Once the possible buyer has been found (by a business consultancy), the steps to follow would be:
- Sign a confidentiality pre-agreement.
- NEVER provide the company name (to avoid leaks).
- If tax, accounting, etc. information is provided, never give information that gives the seller.
Pre-Sale and Audit Contract
Continuing with the process of selling a business, the next step (if everything goes smoothly) is to sign the pre-sales contract. This document indicates that key information about the company will be provided, including the name of the company and of the owners, and that the company is being audited by the buyer. From now on, the cards are on the table: the information about the sale of your company will become public.
At this moment something very important and delicate comes into play: the human factor. It is a process that can take a long time to resolve; maybe a year, or even more. Attrition for the seller is important, since during the audit and negotiation it is likely that unpleasant aspects of your company will emerge or that you will get painful opinions.
Make Decisions Without Pressure
From our experience in selling and valuing companies as business consulting, we know that pressure can lead to erroneous or hasty decisions. The potential buyer is going to try to play his trick, and these are the weaknesses that he will find in the seller who does not know how to sell a business:
- Logical burden for things that have appeared during the process.
- Be hurt by what the buyer thinks about your company or by a money offer below expectations.
- Concern about the lack of progress.
All this can inexorably result in a bad sale. If the professional you have hired to carry out the process has allowed all of this to happen, then they will have failed in their work. The task of those who accompany you and tell you how to sell a business is precisely to save yourself from these worries, and at the same time, manage to bring the sale to a successful conclusion. The best advice we can give you is to put yourself in good hands and trust.
Value Your Tranquility!
Knowing how to sell a business requires knowledge and experience – that of business consulting professionals. It doesn’t matter if you have an exclusive business of yours, or if it is a family business: the tranquility during a sales process is really priceless. If you do things right, you will appreciate it.