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Five Vital Things to Do When Selling a Company

By James Mellor posted 12-09-2020 14:18

  

For most business owners, their company has become an extension of themselves, something akin to a child, and letting go is not easy. Selling their enterprise might become an emotional issue for them, and this is when legalities and formalities might be neglected.

If you have decided to sell your business and find someone interested in buying it, do so in a deliberate manner. Iron out as many details as possible before the sale is finalised. Here are some pointers:

Put everything in writing

Like any sale, selling a company requires a written, formal, legal contract that protects both buyer and seller’s interests. Be prepared to commit plenty of information to paper when drawing up this agreement.

Company sale agreements are intricate, complicated documents, and you will need some legal advice to draft one. At Net Lawman, users can access a significant library of contracts and documents, some of which cover company sales. 

Once downloaded, you can make any necessary amendments and additions. You also have a chance to submit your contract to one of the company’s legal experts, who will review it and suggest any vital changes that affect its legality.

Have your affairs in order

The person buying your company needs relevant paperwork presented and organised for them before they take over. Among the documents you need to prepare are financial statements, current accounting documents, contracts with suppliers, a customer database, and registration paperwork, among others.

While you undoubtedly have these documents and had to show them to the buyer during negotiations, have them in a central, accessible place. Your current ‘filing system’ might not be easy to navigate, so simplify as much as possible.

Do not settle

When you decide to sell your business, have it valued by an expert. This usually entails a calculation of your assets and projected sales. From this figure, determine a selling price below which you will not contemplate a deal. List your business for sale at a slightly higher price, remembering that you can negotiate down, but not up.

If you are not in a rush to sell your business, hold out for the right buyer who will pay your asking price. Consider a broker if you cannot afford to wait. Brokers have a database of contacts they can approach. However, you will forfeit part of the selling price in broker fees.

Market your business

When you meet with potential buyers, have a company executive summary on hand to present to them. This will include projections that show a buyer that your company would be a sound investment. 

However, do not expect the paperwork to sell your company. You will need to pitch it to buyers by presenting it to them and persuading them that it would be foolish for them to leave without making you an offer of the price you want.

Prepare employees

A buyer will usually be reliant on existing employees to guide them when they take over the business. Employees are sometimes loyal to a company owner rather than the enterprise itself. They might choose to leave with you, preferring that option over working with a new owner. 

As your greatest resource, employees have the right to know that you are selling your business. Once a sale is concluded, meet with them to share the news. This gives them enough time to adjust to the idea of a new owner and decide if they plan on staying. 

Ensure that those employees who choose to continue working for the company after the sale have the knowledge and resources to allow operations to continue seamlessly when the new owner takes over.

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