So, you've spent the last 20 years building up your business. Now, it's time to leave the corporate world behind for a beach in Tahiti. Or a condo in Oshkosh. Whatever.
Is it time to sell your business? Here are some tips for selling your business for the best value:
1. Add Value to Your Business
Your company name and that secret product you developed, all of that has value. Protect your intellectual property by trademarking your name, patenting your inventions, or copyrighting your designs.
This will help raise the value of your business for potential buyers. Are you unsure of what to trademark or patent, or if you even have anything to trademark, patent, or copyright? Consult with an experienced intellectual property lawyer for help.
2. Organize Your Books
How much is your business worth? You can't know that without a clear understanding of your assets, debts, earnings, and expenses.
How are you going to value your business? Three basic approaches to business valuations include market-based approach, asset-based approach, or income-based approach. A business lawyer will be able to help you determine the best approach for valuing your business.
3. Hire a Business Broker
Most people hire a real estate broker to sell their houses. Did you know that you can also hire a business broker to sell your business? A business broker can help you value your business, find a buyer, and facilitate the sale.
Brokers usually work on commission, so expect to pay around 10 percent of the selling price.
4. Create a Tight Sales Contract
All the work adding value, valuing your business, and getting a buyer will be for nothing if you don't have a strong sales contract. You want your sales agreement to include as much specific information about the sale as possible to avoid confusion and future lawsuits. Some required information for your sales agreement includes: names of all parties involved, all assets and debts included in the sale, the purchase price, a payment schedule, contingencies and much more.
This is one thing you definitely do not want to be doing alone. Hire an attorney to write the agreement for you. Even if you do write the sale agreement yourself, have an attorney look it over before you and the buyer sign it.
An experienced business attorney will be able to help with the entire process.