When getting ready to sell your business, it pays to step into the shoes of a potential investor. What will they be looking at? This will help you know how to get your business ready for the sale. In addition to working with a business broker 92167 trusts, it is imperative that you learn about the steps investors take when acquiring a business. We will be focusing on these steps in this post.
Gather information from the seller
Prior to contacting you, buyers will have already read through your listing and will have a feeling your business is a good fit for them. When they contact you, they will only be vetting your business further to ensure it is as good as advertised. Keep in mind any information you provide will help them know whether to go forward with the purchase or not. As a result, it is always good to let an experienced business broker 92167 interact with the buyers. The business broker will know which information to share and how to share it. Remember the broker has dealt with numerous buyers before and will be in the best position to screen potential buyers and share information that will compel them to go through with the sale.
There are numerous documents that will be collected. The essentials include:
- Letter of Intent
- Contracts and leases
- Confidentiality agreement
- Sales agreements
- Business financial statements
- Status of building, machinery, equipment and inventory
Potential investors will want to see all these documents in writing. The best thing is a business broker can help you know which documents will be needed and help you prepare them.
Evaluate the price of the business
Once the documents are in order, the next step a potential buyer will do is confirm that the selling price is fair. This involves performing a business valuation. The goal here is to assess the accuracy of the provided cash flow statements, tangible assets and intangible assets. The buyer will be looking at both the current financial health of your business and its potential for growth. They will thus comb through any record that can shed light into this including tax returns, cash flow projection, balance sheet, income statement and so on.
Keep in mind that buyers evaluate the price and condition of a business in order to get a better negotiating angle. Doing your own business valuation will help prepare for this phase and ensure nothing catches you unawares. Make sure the business is in tiptop shape before you get it listed.