1. Determine a Realistic Price Range — If you price your business too high, you’ll scare away buyers. If you price it too low, you’ll risk selling at a bargain basement discount. Your goal is to figure out a range that’s realistic. Get a valuation done as that can be used to help market your company.
2. Understand the Tax Consequences — Taxes can take a huge bite out of the money you receive for your business. You’ll need help from a CPA or other tax expert.
3. Prepare for a Sale — The getting-ready process, of course, includes sprucing up your business premises — everything should be attractive and orderly. But more important is getting your numbers in good shape. Consider recasting your tax-return numbers for prospective buyers. This involves, for example, adding back to your profits discretionary expenses.
4. Seek Potential Buyers — Finding buyers may not be easy. Usually you’ll need to reach out to a big pool of potential buyers. The more interest you get, the better offer you will get. You may want to engage a consultant or broker to reach more buyers.
5. Negotiate The Deal — Once you attract an interested buyer, you need to work out the terms of the sale. The key issues are whether you want the whole business or some of the assets? How will you be paid? What are the terms of payment? Will you continue with the business as an employee or independent contractor? Will you have to sign a non-compete? If the deal is an installment sale or earn-out, how will the buyer guarantee or collateralize the payments? Of course, you need to have professionals help advise you through this process.
6. Sign a Sales Agreement — Once you’ve worked out the key terms with the buyer, you need to put the deal in writing. The deal should be written by a professional and reviewed by a business lawyer to make sure you’ve covered all the bases.
7. Plan for the Closing — The closing is the meeting at which you transfer the business to the buyer. To reduce the chance of last-minute hassles, make a checklist of all the papers you’ll be bringing and all that the buyer is expected to bring.