7 Steps to Sell Your Business (in 2021)
Covid 19 – Covid has caused a massive disruption in business sales. Most people are sitting and waiting for the results of what the coronavirus will have on their business. Businesses that have not been affected by the virus are still selling very well for similar valuations to last year. Businesses impaired by the virus people have been taking off the market and people are being advised to re-list next year.
You have been building to sell your business that you’ve put a lot of time, effort, and equity into growing, and now you’re looking to sell. Your objective is to get maximum value when selling and you’re assessing steps to prepare for the sale. You are trying to get the maximum price for selling your business, getting the best terms and finding the right buyer or looking for the best broker to sell your business.
Make selling your business easy with these eight steps.
1. Determine what your business is worth
A business is generally worth a multiple of its profit. Depending on the size of the deal that can be 2-10 times profit. Smaller deals generally average 2-3 times profit (deals under $3m in price) medium deals 3-5 (deals $3m to $20m) and large deals 5-10 times profit ($20m and over)
2. Prepare your financials with your accountant
Because a business is valued on it profit then good financials required. Preparing an adjusted profit and loss statement is required to present to buyers.
3.Find a broker or investment banker
Depending on the size of your deal and whether you have an unsolicited offer on the table, most companies will garner a higher valuation when sold using a banker or broker.
4.Develop the executive summary of your business
This is the document that outlines what the business is, financials and frequently asked questions to help the buyer make an offer.
5.Put your business on the market
Market your business to buyers looking to acquire a company.
6. Field offers from potential buyers
Receive offers from buyers and negotiate the best one.
7. Let the buyer perform due diligence
Buyers generally get 60-120 days to verify the financials and validate they are getting what they are paying for.
8. Close the deal
Time to celebrate! Sign the final contracts and the handover process starts.
FAQ’s On Selling A Business
How much is my business worth – You can sell your business for what the market will pay. It is the buyer that determines the price of a business. As it the market that determines value. That being said. A business is generally worth a multiple of the earnings. That means a value applied to the profit of your business.
How do you price your business for sale? – You price your business for sale depending on how much money it makes. It you are making no money it is price on the value of assets. If it is making a little bit of money it is sellers discretionary earnings. If it is making a lot of money it is a multiple of EBIDTA.
How long does it take for a company to sell? – Generally the larger the deal, the longer the time frame it takes to sell a business. Many Business Exits average about 7 months to close a deal.
How can you sell your business quickly? – You can sell your business quickly by having it priced correctly. Everything can be sold for the right price and terms. One of the best ways to sell your business quickly is to offer it to someone with no up-front payment and an earnout based on performance. This can be to your business partner, employees, competitors or someone in your network.
What type of business is the best to sell? – Businesses in all industries can be sold. However the differences is in the valuation across industries. Some of the most attractive industries receive much better valuations currently are service companies, Logistics and Transportation, Property Management, Home services, and Technology companies.
If you have a business you are thinking about selling, why not give us a call and lets see how we can work together to get you the best deal.