01 Aug Three Factors that Impact the Sale of a Business
The act of selling a business is a time-consuming and overwhelming process, especially when added to the day-to-day challenges of keeping that business running successfully. The final sale price will vary based on a multitude of factors. However, there are aspects that the business owner can control to ensure the highest dollar figure is achieved.
Timing is Everything
Timing truly is everything when it comes to selling a business, and there are factors that the entrepreneur can influence, such as the growth and maturity of the business and its employees. However, there are factors that are out of the entrepreneur’s control, such as the demand forecast for the business’ goods and services, as well as the condition of the economy. The longer the lead up time and the more preparation, the greater the chances are of selling the business for a great price.
Consider the Employees
A change in ownership can cause unnecessary stress in a workplace, so it is recommended to hold off on any announcements until the sale is nearly complete. Non-Disclosure Agreements (NDA) are an ideal way to minimize the spreading of information about the transaction. It can also act as a barrier to stop employees from making major changes that could affect the selling price. Notify the leadership team first, and come up with a well-thought-out plan to share the news.
Organize All Financials
It is important to keep all of a business’ financial documents organized and current, and it becomes even more crucial during the selling process. All ledgers will be under intense scrutiny from potential buyers, and it is not uncommon for them to request the last three full years of financials. Consult with the business’ accountant to ensure everything is as accurate as possible. This is where being proactive has its rewards, as the fewer questions raised by the prospective buyer the more likely the deal is to unfold without problems.
The process of selling a business is very involved, which can present a difficult challenge to entrepreneurs. While not required, consulting with an experienced attorney can help ease the burden and ensure the sale runs smoothly.