Owning your own business is one of the most rewarding things in life. It takes a lot of hard work and dedication to make it successful, but knowing that you grew it all on your own gives you an unparalleled sense of pride.
However, the business world is fast-paced and ever-changing. It is in your best interest that you prepare for selling your business, just in case an instance should arise where it’s a good idea.
It can be a complicated process with many moving parts, and it could take months to finalize it, but there are four distinct phases through which every business sale passes through:
- Finding or selecting a buyer
- Letter of intent
- Completing the transaction
The preparation stage is the time to make your business the best it can be ahead of a sale. The overarching goal of this is to identify and address any weaknesses that a buyer could use to drive down the value. Proper preparation will ensure you will get as much out of your business as you have invested into it over the years.
Finding or selecting a buyer
Once you feel your business is free of any issues that could lower its value, you are ready to narrow the pool of potential buyers. While fielding multiple offers, you need to consider who would be the best fit to take over your business. In this process, think about:
- Your competitors
- Others in similar industries
You, as the business owner, know your business the best, so consider potential buyers carefully. Choose a buyer who will do it justice, and ensure its continued success.
Letter of intent
Once you have found a buyer that you could see turning your business over to, the next step is to review the buyer’s letter of intent. This is an initial agreement between you and the buyer, and it is generally not binding. While reviewing the document, make sure there aren’t any vague terms or conditions that could hurt you if the buyer decides they want to renegotiate later.
Finalizing the transaction
One the buyer has done their due diligence; it is time to make the sale official. You will create an agreement that contains terms and conditions that both you and the buyer will agree to. Once both parties have signed this document, the sale is final, and your transactional relationship has ended.
Need help selling your business?
Going through this process can be stressful and time-consuming. To make sure everything goes smoothly and is up to legal standards, it could be helpful to seek the guidance of an experienced business law attorney.