In Positioning Your Business for Sale, we covered the importance of having a Shareholder Agreement to protect the owners in the event either experiences a significant change.

We continued with the preparation steps to sell the business. Consideration was given to the importance of keeping the pending sale confidential from employees, customers, suppliers and competitors.

We recognized the complexity of a sale, including the emotional aspects and the impact on the family. Strategic and financial buyers were discussed which lead to the aspects of an ideal purchaser.

The role of others included the accountant, lawyer, banker and professional property appraiser. We also discussed the balance sheet items that needed to be inventoried and valued.

We reached the conclusion that a great deal of effort is required to achieve the most realistic sales price. Because the selling process can distract you from the daily running of the business, you may want to consider hiring a professional business broker. The selection and hiring of a professional business broker would cost about 9% of the selling price for a business worth about $4 million. The fee will have to be balanced against the risk of employees, customers, suppliers and competitors discovering the business is up for sale. It becomes public that the business is for sale, over the estimated year-long period needed to prepare and find a suitable purchaser, the employees may have quit, customers may have been raided by competitors and suppliers may have reduced their credit terms so there is little business left to sell.

Looking ahead to Preparing for a Transfer of Working Knowledge, you will focus on transferring a working knowledge from the seller to the buyer. You will consider communication meetings with the purchaser, a timeline for the transition and as assessment of the new owner’s skills. Preparing for a Transfer of Working Knowledge will introduce overcoming challenges, understanding limitations and building a succession plan. Finally, you will discover how to develop a mentoring program to help the business get to the next level with the new owner.

In Preparing for Ownership (see the Buyer section of this course), the importance of human resource management was discussed. Strategies for recruitment and retention as well as supervisory leadership skills were introduced. Take the time to review Preparing for Ownership to identify the points a buyer will be looking for.

The main task the seller should now focus on is the assembly of the various financial documents and increasing the understanding and importance of each document to the buyer. Look for not only strengths in your business but also weaknesses. The weaknesses are opportunities for the new owner to strengthen the business. Be sure to spend time watching the videos on Pacific Business Brokers website. You will pick-up several tips, which will be well worth your time. Videos include:

Myths, Misconceptions and Realities about Selling a Business

Who Should You Sell To?

What You Should Expect When Transitioning a Business

Selling Your Business—Effects on Your Employees