If the time is right for you to sell your business, or if you are considering selling your business in the future, you might find the following information helpful.
There will be a right time for sharing with your employees about the sale or your company. However, you should not prematurely tell your employees that you are selling. If you are in the beginning stages of considering selling your business, the actual sale could be eight months or a year away. Your key employees could begin looking for other work, most likely at your competitors. Key accounts could find out the status of your selling and begin looking for new vendors if they feel uncertain about the future.
The value of your business could be affected by any number of these or other factors at a time when you are trying to achieve the best possible price.
An exception to this is that, depending on your organization, it may be necessary to inform a key employee about your plans to sell the business. Usually this will be your accountant or a senior-level manager. Since buyers and lenders will be requesting updated financials on a regular basis, bringing them in early can help prevent rumors from spreading. Also, potential buyers might request to negotiate non-solicitation or non-compete agreements with senior level managers.
In short, typically, the best time to share news of a company sale with your employees is when you are able to introduce them to the new owners.
Based on the size and type of business, the seller will typically stay on for a period of three to eight weeks to train and insure a smooth transition. More complicated technologies or larger acquisitions require a longer period of time. This also largely depends on how the overall deal is structured.
In an extended transition, the former owner’s compensation, typically, is negotiated based on an estimate of how much would be needed to pay someone in that industry to replace the owner’s level of contribution to the company.
Confidentiality is one of the most important issues surrounding the sale of your business.
Your ongoing relationships with employees, customers, and suppliers are extremely important factors to your company’s success and to the value you will receive for your company. Any premature indication of a possible change in ownership could disrupt these relationships and could weaken your company’s competitive position. That is why confidentiality is critically important at every stage in the process of selling your business.
With the proper care and procedures, it is possible to minimize the risk of an untimely disclosure. Robert Business Broker’s first contact with potential buyers is made through our strategic marketing campaign using a blind profile of your company. Your company details and location are only described in general terms. A description of your services, products and opportunities for growth are explained along with key financial metrics. However, your company is not identified in the blind profile.
You can rest assured that the process will remain confidential when you use Paragon Business Brokers to handle the sale of your company. This will allow you the freedom and time to continue to focus on running your business throughout the sale process. Ensuring that there is no disruption in your continued operations is a key metric in maximizing your closing price.
Clearvue Business Brokers maintains your confidentiality and confidence by only releasing information about your business to qualified, interested buyers who work under and agree to our confidentiality agreement.
Meeting are arranged with qualified, vetted and interested parties, giving you the opportunity to meet the buyer while they get to find out more about your business. Meetings can be held in neutral locations in order to maintain confidentiality.
A business valuation is an essential part of running a business, preparing for an exit strategy or getting ready to sell your business. For these or any number of other reasons, you need to know how much your business would be worth in the current market.
Clearvue Business Brokers will provide you a FREE, no-obligation business valuation which will provide a general price range you could expect in today’s marketplace, and will help you decide if the time is right to further explore a sale.
When you decide to sell your business, important in achieving the highest price, is to not take your eye off the ball of running and growing your business. Selling a business requires a sustained effort and can demand a lot of time. There is a lot of preparation in getting the marketing material ready for presentation, running a sustained, strategic campaign and qualifying the interested parties.
Also, the process of selling a business can be very complex. Whether you’ve sold a business in the past or are selling a business for the very first time, it is imperative that you work with an expert. Clearvue Business Brokers can help you navigate through what can be some pretty choppy waters.
Clearvue Business Brokers has industry connections and a pool of prospective buyers and can get YOUR business in front of them. We understand the process, the documents needed and how to keep the deal moving forward. We act as a buffer between you and interested parties when questions and difficult situations arise.
Selling your business could be one of the most important and complex decisions you will ever make. You owe it to yourself, your family, and your employees to do it right.
From experience, Clearvue Business Brokers knows:
- How to build and run a business
- How to get a business ready to sell
- What is important to an owner during the sale process
- How to protect anonymity and confidentiality of the business and the owner
- How to promote the business to the right market of buyers
- How to maximize the amount of offers through strategic marketing
- How to negotiate and close the deal
Clearvue Business Brokers will consult with you to understand the value of your business and your goals. We will advise you on how to best maximize your sale price and minimize your tax burden. We will increase the pool of potential buyer candidates and provide aggressive, confidential marketing. We will interview, screen and qualify buyers. Once we have identified a good match for your business, we will negotiate terms and a structure to achieve the best possible outcome for you.
Regular communication and a clear understanding of what’s going on is vital to any business sale. You will receive prompt, accurate feedback and reporting to keep you informed at every stage of the process.
National statistics show that, on average, it takes between five and twelve months to sell most businesses. Some businesses will take longer to sell, while others will sell in a shorter period of time.
The industry, location and financial performance of the business along with the current economic conditions all come into play in the length of time needed for a business to sell.
Price and terms of the sale have the biggest impact on timing. Clarity of documentation, cleanliness and accuracy of records, and the amount of time needed to gather marketing information are also factors.
The sale process timeline includes the following steps:
- Conduct research and create marketing materials including the Confidential Business Review and a Strategic Marketing Plan
- Carry out the marketing campaign
- Conference calls and determination of buyer interest and qualifications
- Indication of interest including letters of intent
- Detail negotiations
- Due diligence, document preparation and transition planning
As each business is unique, so too is the selling period an average business requires. However, there are some preparatory steps that can be taken to move the process along.
There are some things that you can do to maximize the overall value of your business and speed up your sale process. One thing that is very helpful is to gather all of the important financial documents that the buyer might require during the due diligence process. Requirements will vary by buyer, industry, and business. These items might include:
- Three years of financial statements
- Three years of tax returns
- Accounts Payable and Accounts Receivables documentation
- On-going contracts, leases and licenses
- Payroll summaries for one year
- Details of all chargebacks to discretionary income and owners’ salaries
- List of all equipment and other assets to be included in the sale with current market values
- List of all equipment and related assets NOT included in the sale
- List of all employees with job descriptions and employment dates
- A copy of all marketing-related material
Having these documents organized and ready for the due diligence process will make the process easier and smoother.
A Non-Disclosure Agreement or Confidentiality Agreement is a legal document signed by both seller and buyer in which both parties agree to hold each other’s financial and private information in strict confidence. A buyer who is willing to sign this agreement is interested enough in your business to sign a legally binding contract.