Business Development, Business Planning, Entrepreneur, Exit Strategy

How to Sell a Business

Business Advice | 30 January 2023 | 1 year ago

There are a lot of reasons to sell a business; perhaps you are retiring or you want to boost your capital, or perhaps you have a new business venture that you would like to dedicate your time to. Whatever the reason for selling a business, knowing how to sell correctly will ensure that you make as most money as possible and attract the right kind of buyers.

Assess Your Business

Before starting the selling process, you need to assess how appealing your business is to potential buyers. This will give you an idea of how much you can expect to make, and how interested people will be in what the business has to offer. Things such as growing profits, a growing customer base and a strong brand are all major selling points. Businesses with the potential to grow are highly sought after, as this indicates that there is a high chance the buyer will be able to make money on their investment. Businesses with a unique proposition or intellectual property are also popular, as these are likely to stand out and succeed in the industry. Knowing what your business has to offer will help you to determine its worth, and how valuable the sale will be.

Value Your Business

There are various models to determine how much your business is worth, like the price-to-earnings ratio. This ratio indicates how much money a buyer can expect to earn per $1 of company earnings. You can also consider an asset sale or a shale sale if it’s a limited company, which gives multiple people the chance to buy into the business in one way or another. Accurately valuing your business is important, as this ensures that you don’t miss out on a higher profit. It also ensures that you don’t price your business too high and miss out on a sale.

Find a Buyer

Finding a buyer for a business is not the same as finding a buyer for an item, product or service. You can’t simply advertise your business as being for sale online – you can, but it’s unlikely that any serious buyers will come forward – nor can you rely on word of mouth amongst others in the industry. One of the most effective ways of finding a buyer is to use a business broker. They can support you through the process by acting as a middle man for the transaction.

Negotiate the Sale

When you are selling a business, it’s important to ensure that the terms of the sale are understood and written correctly. Otherwise, there is a risk of ambiguity and misunderstandings happening. When the sale is being negotiated, a solicitor should be involved to ensure that everything is legally binding and correct.

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