Essential steps to successfully selling your business
Selling your business is a time filled with anxiety, stress and excitement. It is a step that requires as much, if not more, preparation and reflection than creating your business. A good sale requires great anticipation, but it is sometimes difficult to organize yourself and know how to go about it. In this article, we have put together some key tips so that the sale of your business takes place in the best conditions, with confidence and serenity.
How to sell your business?
That's it, you are going to sell your business. You will He Tuber take down and put away the professional plaque ordered the one which proudly sits next to the front door, and pass the baton. But making the decision is just the beginning of a series of important and sometimes tedious steps. The financial issues are serious and the decisions made will define your future. You must therefore perfectly prepare and organize the transaction, define a fair and consistent price, but also find a serious buyer.
First step: anticipate and prepare for the sale
If I could only give you two pieces of advice to help you successfully sell your business, it would be “patience” and “anticipation”. Indeed, too many entrepreneurs rush, due to lack of time or lack of investment. Serious mistake: it is necessary to take the time to do it right so that the transfer goes as smoothly as possible. You must also prepare your arguments to be able to promote your business to potential buyers and thus obtain a good price. It is therefore essential to ask yourself several questions: why do you want to sell your business? What are you going to do after the sale? When is the best time to sell? What type of buyer are you targeting? At what price do you plan to sell the business?
The preparation stage is also the time to carry out several precise diagnoses in order to be as successful as possible in the future negotiation. The diagnosis allows you to take stock of the positive and negative sides of the business, so you must take into account all aspects of the company:
the activity itself (the products or services, market analysis, customers and suppliers, position in the face of competition, etc.),
the accounting and financial aspect (assets/liabilities, debts and receivables),
human resources (skills mapping and employee organization chart),
technical means (equipment, premises and infrastructure),
the legal and regulatory aspect (regulatory constraints, contracts, labels, brands and patents filed by the company).
Second step: define the right price
Determining a fair sale price is certainly the most delicate step in the transfer process. To help you estimate the value of your company, there are 4 methods:
The patrimonial method: this involves making a precise inventory of what the company owns (tangible, financial and intangible assets) and removing the liabilities. In other words, this consists of evaluating the net situation of the company: it is worth what it has.
The comparative method: in this case, the company is evaluated according to the value of its competitors, using a scale and a multiplier coefficient of the company's turnover.
The economic method: it is the profitability of the company which allows its value to be assessed. It is then appropriate to define the profits generated based, among other things, on the net result, the operating result or the MBA (gross cash flow margin).
The empirical method: here, the future prospects of the company are taken into account. This means that its value corresponds to the cash flow that the company could generate in the next 5 or 10 years.
Third step: find the buyer
Here too, patience is required. You should not choose the first buyer who comes along, but wait and take the time to negotiate with several potential buyers. This often results in a better price.
To find a good buyer, you have to know how to look for them. To do this, many means exist: personal and professional networks (friends, families, employees, customers, suppliers, etc.), specialized organizations such as the Chamber of Trades or the Chamber of Commerce, paid advertising platforms or even specialized sites. If you place an ad, make sure you give all important information. The more complete the ad, the more likely it is to attract truly interested potential buyers.
Fourth step: prepare your teams
Communication and transparency are essential when a company takeover is being prepared. Moreover, for companies with fewer than 250 employees, informing their teams is an obligation. Failing this, the court may impose a fine on the entrepreneur, the fixed amount of which represents 2% of the sale price. This duty encourages internal communication and gives employees the opportunity to make a buyout offer.
