How to Get Your Business Ready for Sale
If you’re planning on selling your business, you’ll need to do some work first. It isn’t as simple as putting a “For Sale” sign on your property – at least not if you want to maximize the value of your business, minimize taxes, and do what’s best for everyone involved – including yourself.
You’ve spent time, money, and effort building your business, so it’s only natural that you’d want to get the most out of your investment for you and for all the stakeholders involved. Here are some tips for preparing your business for sale.
Prepare Your Company in Advance
It takes a long time to get your business ready for sale. It isn’t just something that you can do spur of the moment. Preparations should occur at least one year before you hope to sell – and hopefully two if possible. There are many reasons for this.
One is that you’ll want to have some sort of succession plan in place in case the buyer is planning to continue to operate your business after you leave (rather than absorb it into their own business). If you don’t have a management transition plan, you won’t be able to attract as many interested buyers and that means you’ll likely get a lower price. You will also want to have a plan in place for how key employees will be retained after the sale, as this will help the business retain value.
Another reason to plan in advance is tax considerations. When you sell your business, you could find yourself with a big tax bill. If you plan the sale well in advance, not only does this give you time to save for the tax bill, but you’ll also give yourself more options to structure the business and the deal to reduce taxes where possible.
Finally, a well-planned exit will allow you to separate the emotion out of the situation, allowing you to optimize the result of the sale. Selling something you worked on for a long time can certainly be emotional, but if you give yourself time to prepare you’ll be able to make a better decision.
Provide the Necessary Info
Anyone who is potentially interested in buying your business will want to have a detailed financial analysis of your company. You’ll want to have your financial statements audited independently to give potential buyers more confidence. They’ll also want to see historical financial statements, business projections, detailed lists of expenses, and much more, so make sure you have this information available and up to date.
It’s also a good idea to double check that your business is in compliance with all regulatory requirements and legal requirements, and that taxes, trademark registration, legal issues, and any other potential issues are taken care of.
How a Chartered Professional Accountant Can Help
Working with a Chartered Professional Accountant (CPA) can help you prepare your business for sale. Our team has the experience and knowledge needed to provide due diligence and valuation services, so you can be assured that you are getting fair value for your business.
We work with public and private businesses, large and small, to analyze market conditions, reorganize businesses for tax planning purposes, conduct financial statement analysis, settle disagreements between partners, and tackle all of the potential financial issues a business could face during the selling process.
CPAs are fair, orderly, and always follow strict confidentiality. Contact a member of our team today for more information on our mergers and acquisitions services, business valuations, and more.
