An Overview of the 15-Step Business Sale Process

In the last issue (#15), we asked the question Can You Afford to Sell Your Business? In this issue we will provide An Overview of the 15-Step Business Sale Process specifically targeting smaller businesses.

" A journey of a thousand miles begins with a single step." Confucius

An Overview of the 15-Step Business Sale Process

Following are 15 steps to a successful exit from your business:

1) Work with your advisors to develop an exit plan:

  • Consider your personal goals, your financial goals, your current financial situation, your desired legacy, the approximate current value of the business and your estimated desired time frame for your exit.
  • Develop a contingency plan to be implemented in the event of your premature death or disability.
  • Consider tax implications and implement required changes to minimize taxes.
  • Determine your exit options (i.e. a sale to a third party, transition ownership to family members, etc.)

2) Identify obstacles to a successful sale and implement plans to overcome the obstacles.

3) Make improvements to increase the value of the business.

4) Make the decision to sell your business.

5) Interview, select and sign an agreement with a business broker or merger & acquisition (M&A) intermediary.

6) Determine the fair market value of the business, your asking price, your desired terms and deal structure.

7) Prepare the business for sale (hopefully much was accomplished previously when making improvements to increase its value).

8) Market the business confidentially through the business broker/intermediary.

9) Meet with prospective buyers prequalified by the business broker/intermediary.

10) Evaluate any offers or letters of intent received.

11) Negotiate a preliminary agreement with acceptable terms, structure and contingencies.

12) Cooperate with and survive the due diligence process conducted by the buyer.

13) Work with your advisors to modify and approve the definitive legal documents used to transfer ownership of the business.

14) Close the sale (yeah!!).

15) Provide post-closing training of the buyer and invest your net sale proceeds.