There are numerous reasons why you may choose to sell your company. Whether you’re about to retire, want to try something new, or believe someone else is better off taking the reins, there are many factors that go into this emotional and financial decision that shouldn’t be taken lightly.
Once you’ve decided that it’s time to sell, you’ll want to maximize your return and expedite the process. For everything to run smoothly, here are some things to consider before selling your company.
Business Structure and Ownership
Before you put your company up for sale, you need to have a think about how your operation is structured and who owns a piece of your brand as this will impact the sale of your company. If you’re the sole owner/proprietor of your company, the decision is entirely up to you. However, if your company is organized as an LLC (limited liability company), other members and shareholders must converse and agree to the sale. An agreement like this can conclude into a corporation resolution, which is a written statement formulated by bylaws or operating agreement of the business. To have a full-scale understanding and knowledge about the legal impediments of selling your business. You need to seek legal advice or a professional one by checking out CGK Business Sales.
Employees
Like with any business, your employees are the backbone of your operation. Without them, you won’t have achieved any success in the first place. This means that, when it comes to selling, your employees’ status should be taken into consideration. It’s your job as the business owner to discuss the selling of your company with employees in advance. Your team needs to know where they stand in terms of job security, so be sure to discuss your employees with buyers too. If necessary, look into outplacement services as well.
Value
If you’ve worked hard to build your business over many years, it can be difficult to put face value on your company. However, once you’ve decided that it’s time to sell, you must put any emotions aside that could result in you asking for an unrealistic price. If you’re struggling to establish a realistic value of your brand, you may want to speak to a business evaluator or consult with a CPA. For SaaS companies that use software to provide consumers with a service, check this guide on understanding SaaS valuation. You should never agree to a price that you’re not happy with, so don’t take the first offer you get.
Tax Consequences
Regardless of the way you structure the sale, there will be tax consequences that you must bear in mind before going any further. Selling a company is similar to other transactions in the sense that it creates a profit. Therefore, you’re likely to pay taxes as a result. Before putting your company up for sale, it’s highly advised to speak to a tax advisor or consult with a CPA (certified public accountant) who is an expert in tax law.
Due Diligence
While due diligence is discussed during the buying process of a company, it’s just as important when selling. When consulting with buyers, they may request data, documents, and other pieces of information to review to identify any potential roadblocks or liabilities that could hinder the transaction. Whatever you do, you mustn’t disclose any private information until the potential buyer signs a confidentiality agreement. If this is your first time selling a business, you need to be prepared for all kinds of questions that you must respond to, as well as provide documentation requested.
You’ve worked hard to build your brand and create a profitable company, so when it comes to selling, bearing the above in mind will help you prepare for a successful sale and get the asking price you’re after.
