Selling a business is like selling a home: curb appeal counts, and a good presentation makes all of the difference in how much of a price your business commands.
Any business broker or agent is going to want to know everything – no holding back; the good with the bad. All financial statements have to be in order, ready for audit. There will be no second chances when due diligence is being performed, no “we’re working on that” will be acceptable.
Buyers are going to want to know exactly what they are buying in terms of hard assets, soft assets, and goodwill. Most small businesses are closely related to an individual or partners. Will you be leaving immediately upon the sale, or staying for a while after the transition? Will you lend your name and reputation to your buyer, so existing customers will have the comfort of knowing you endorse the new owner?
If you are a business with an inventory and rely on raw materials or parts suppliers, the new buyer will want to know everything about the current supplier relationships. Can they be trusted to deliver and continue to provide favorable terms? Will the creditworthiness of your business
translate to the new owner?
The same is true for distribution channels. Will distributors want to continue to handle your product? If your business relationship has always been just a simple handshake, will those deals continue?
If you’ve been in a location for a long time, will a new owner want to stay there? Are you in this location because it is convenient for you? Would moving to a new location after a sale make a difference in profits? If you’re in a building you own, will you be selling the building along with the business, or become a landlord?
What shape is your location in? Would a coat of paint provide an inviting look for strangers coming into your business while peering into storage lockers and opening drawers?
Selling a business can be both an excruciating and liberating experience. It’s tough to think about leaving something you may have put much of your career into.
The crucial step in successfully selling a business is to consult with your financial advisors to make sure it is ready to sell. Being well prepared could make the difference between a good price and a great price.