Selling Your Business: Understanding Your Options
Business owners normally intend to sell their businesses at some point. However, most owners don’t understand the impact of selling and how to ensure they end up with the best ROI possible. Business brokers work with clients to evaluate their needs and develop a workable exit plan.
Planning is crucial when marketing a business, and business brokers are invaluable when it’s time to move forward with a sale. That means a seller’s first step once they’ve decided to sell is finding a business broker. The broker selected will review the business, listen to the seller’s needs, and recommend a team to assist with the sale. Determining the team members as early as possible helps to ensure the sale proceeds as quickly and easily as possible.
Determine How to Sell the Business
There are several ways to sell a business, with each requiring a different sales strategy. The first option most sellers think about is attracting a private buyer. In that scenario, the broker puts the business opportunity in front of as many prospective investors as possible. The intention here is to sell to an individual who intends to operate the business as is or improve it.
The second common sale option is a management or employee buyout. In other words, current employees take steps to purchase the business from the owner and operate it themselves. This option is quite common with smaller businesses, but even huge companies may be sold using this strategy.
The third option is selling to a private equity buyer. In a private equity sale, a buyer (or buyers) purchases a company to improve it and resell at a profit. The capital used for the purchase is acquired from outside investors who don’t physically take part in the overhaul of the company. The business broker works with each client to evaluate the circumstances of the sale and recommend a path forward.
Determine the Timing of the Sale
In most cases, the sale timing is crucial when obtaining the highest ROI is the objective. Some businesses sell better during a specific season. For example, selling a lawn care business is difficult during the winter but appears more attractive to buyers during warmer months.
A business’s value will also vary when outside influences enter the picture. When a city decides to renew an area, companies may see an immediate increase in their value. Conversely, when an area declines, a business is likely to see a reduction in value.
Brokers understand the impact of timing and help sellers determine when to market their business. That’s why most investment experts recommend that sellers plan a sale well in advance. The timing could easily make the difference between a sale for top dollar and one that results in a minimal return on investment.
Invest in Improvements to Generate a Higher ROI
Another option the broker or other members of the sales team may recommend is making improvements designed to make the business more attractive to potential buyers. That could entail updating the physical plant, replacing dated equipment, or liquidating unsold inventories. Buyers look for companies that are already using the latest technology, so updating internal systems may make sense. Brokers help sellers decide when and if improvements would increase the odds of a profitable sale.
Contact a Business Broker to Start the Sale Process
Even if you’re not considering selling for a couple of years, now is the time to contact a business broker for advice. Since selling a business involves a complicated process, the planning should start as early as possible. Get in touch with a broker now to get any questions answered.