Selling Your Company: What to Expect and What Actually Happens Afterward
July 22, 2019 (Investorideas.com Newswire) Selling a business is difficult. Many entrepreneurs approach selling their company the wrong way. They aren't sure where to start, and don't think about it until it's too late. The right way to sell your business is to consider life after selling well before you actually sign it over. When you are properly prepared, selling can be very rewarding.
When planning to sell your company, you will need a target sale price. A good starting point is to figure out how much money you will need to support your lifestyle in retirement. How do you want to live? How do you want to support others? What kind of money do you want to pass on to your children or grandchildren?
When it comes time to set your asking price, there are many factors that will influence it. Having a goal in mind from the beginning will help you maximize your chances of selling your company for the price you want.
Types of Buyers
There are three main types of buyers. There are private equity buyers, strategic buyers, and high net worth families. They all have different priorities. Think about how your company can appeal to each type.
The private equity buyer wants a business with a profitable future, one that has potential. They want to grow the company, merge it into another company, sell it, or get it to an IPO.
The strategic buyer wants to fill a need in their existing business. It may be a missing component in one area of their company, such as manufacturing. They may also have a geographic void that needs to be filled, and want to expand into other regions.
The high net worth family wants to give a business to their children. They may want their children to run it or they might want to earn a consistent income with the business. The family may also want to acquire the business to add it to their investment portfolio.
Considering other types, some buyers may even trade in forex or have some forex islamic account. They deal with investing and trading in the forex financial market and probably aren't interested in buying businesses.
What Buyers Want
Results over potential
Buyers don't want to see a promising concept. They want to see promising results. A business with a proven track record of generating sufficient income is much more valuable in a buyer's eyes than an unproven business that has potential. If buyers were not looking to acquire something that has already been established as a success, then they would start their own business and develop it. You can't sell your business bases on perceived potential. You need to show results.
Profits over revenue
High revenue figures may sound impressive, but they don't matter as much as the amount of profit a business generates. If the revenue is high but the expenses are also high, then the profit will be low. If the expenses are low compared to the revenue, the income will be high. Buyers want to see how much profit your business is turning.
Verifiable profit claims
Buyers need proof that your company is making the profit you claim it is. They may want to see invoices, bank statements, or deposit records. For smaller businesses, you can even show them your online accounts so that they can see your financial figures in real time. Larger companies may find using an accountant to disclose verifiable financial information more practical.
It is important to have the right mindset when you sell your business. Some entrepreneurs find themselves overwhelmed with feelings of grief. Be patient with yourself. Remember that grieving is healthy and a normal part of the transitioning process. Give yourself enough time to grieve and process the intense emotions you may be going through as a result of selling your business.
To have a successful transition from owning a business to life post business, you need to have a plan. You have all this newfound freedom, yet you may be suffering from a loss of identity and community that you had in your business. The goal of your plan is to replace your business with something purposeful. You need to get clear on what is most meaningful to you. It could be taking time to rest, spending time with family and friends, taking up a hobby, learning a new skill, getting involved in charitable work, serving as a mentor, exercising, or traveling.
Selling the business that you have worked hard on and dedicated a substantial portion of your life to can be daunting. As with any significant endeavor, give it the attention it deserves. Take the time to thoroughly prepare yourself so that you can reap all the benefits of selling your company.
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