If you're thinking about selling your business, it pays to be prepared. Here are some strategies that can help you make the deal:
- Keep financial reports and tax filings current. Although there may be nothing wrong with your company, you'll scare off bidders with tax-reporting extensions or excessively delayed financial statements. If you've had trouble staying current in the past, upgrade your accounting software or consider switching accounting firms.
- Strive for accuracy. Serious bidders will demand a high level of comfort, especially about the accuracy of cash-flow statements, accounts-receivable lists, and the assessed value of fixtures, equipment, and inventory. This is a time when it may really pay off to invest in audited financial statements.
- Time your deal right. Although it always makes sense to try to sell during a hot market, it's even more important to pay attention to what's going on within your company and industry. The bottom line: Don't try to sell during a significant downturn (unless you absolutely don't have any other options and are prepared to accept a rock-bottom price).
- Keep things simple. Anything unusual is bad news when it comes time to sell your company. So look at your business the way a stranger would, and eliminate complications before you try to sell.
- Accept reality. If you're operating in a highly competitive market, there's no doubt that your buyer will insist on a noncompete agreement (and perhaps even a clause in the sales contract that states that you will not try to hire key staffers for any new business operation at all). If you're not prepared to make such concessions, your company probably won't sell.
- Put a realistic price tag on your company. A good rule of thumb is that only on the rarest of occasions do companies sell for a price that's as high as one times revenues. If you're trying to sell for more than that, be prepared for your financials to be examined under a microscope.
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