Selling a company can be complicated and costly. For most people it is a unique event in life. Take a few moments and read through the following sections. They contain information about how to prepare best and what to expect:
- Why do I wanna sell?
- What is my company worth?
- How can I increase the value of my company?
- Confidentiality and discretion
- What documents are required?
The sales process
1. The decision to sell the company
Your decision to sell is based on different circumstances. Whatever the reason, retirement, changes in personal or business circumstances or a desire to change the lifestyle, make sure that you have considered all the other options and make a well thought out decision. The decision to sell your own business is often a long process. It is difficult for most people to separate from your company, in which they have invested a lot of work and passion. Great emotional value lies in many a company. Consider all financial, legal and emotional consequences before you take your business to the market.
The cost to sell a business not only consists of advertising and professional fees. If the sale is delayed, or if the seller is not 100% focused on the business, it may cause serious damage.
Therefore it is extremely important that you in selling your company do not engage in any “experiment” but professionally proceed and define your goals precisely. If have you finally decided, the sale should happen efficiently and at the best possible price.
Brill Business Brokers can do this for you.
2. What is my company worth?
Try to understand what the market of your business looks like. It is important to see the value of your company through the eyes of a buyer to set a realistic price. Unfortunately, one’s emotions are usually paid very inadequately.
A non-binding conversation with a consultant from Brill Business Broker can help you get a clear idea regarding the selling price, and the connection with the sale procedure. Brill Business Brokers uses a rating system that is a combination of intrinsic value and income value. Ultimately the enterprise value determined. Usually this value achieves to be the effective selling price.
It is not unusual that opinions regarding goodwill are different. You should not be discouraged by this. Let us first explain how the price is established. The better informed you are, the better you can decide. Ultimately the paying price is determined by the market.
3. How can I increase the value of my company?
Now is the right time, “decorate” the company. Attach a new company sign, replace the carpet, discard old and consumed inventory, leave the building repainted. Visually, everything should be perfected. Do not assume that a new owner will do this or that, it will just lower the price.
Analyze your business very carefully so that you won’t overlook other important aspects that make your business more attractive to buyers. Do not forget the value of customer databases, self-developed products and / or processes of well-maintained equipment, secret recipes, custom software programs, or good employees. These factors are known as intangibles, and even if not officially considered in most pricing models, you can increase the company’s value through them.
4. Confidentiality and discretion
Confidentiality and discretion are the alpha and omega in the sale of a business. There is a risk that information on the pending sale will become public or rumors arise. Thereby major customers or employees could leave the company. The damage can be immense. Absolute discretion determines the overall approach of Brill Business Brokers.
Our experience allows us to market your business professionally without discretion and zero publicity if demanded. All interested parties are required to sign a confidentiality agreement before receiving detailed information.
5. What documents are required?
Here is a checklist of documents that are important for a sale:
- Balance sheet and income statement of the last three years
- Tax return of the company for the last three years
- VAT return for the last three years
- List of fixed assets including depreciation table
- Copy of the lease
- List of loans and creditors of the company (amount and due date, repayment schedule and interest rates)
- List of accounts receivable of the Company (amount and due date)
- List of Stocks by category including depreciation table
- List any existing litigation, especially if ongoing
- List of any external consultants
Our consultants are offering their help in putting together the necessary documents if you wish.
6. Buyers want to know
This question is perhaps a little early, because you have not yet decided to sell. This will help you in the decision: Not only should you know who the buyer is, but what he or she wants to know when buying your business.
Here are some questions that you are likely to be asked:
- What is the annual revenue growth?
- What is unique about my business?
- How is the product or service presented?
- How can the business be expanded?
- Who are the main competitors?
- What are the dangers?
- What is the profit situation in good times and in bad?
- How big is the inventory?
- How much debt does your company have?
- Will the seller offer a training and support time remaining in the company?
7. Sales Process
Brill Business Brokers will create a custom marketing plan for your business and implement these steps. If we see sincere interest, we will further conduct a personal interview on the potential buyer’s qualifications to take onto your business. We will conduct a discreet tour of the company in which you should answer to technical questions only. Answers to questions regarding the company’s figures and the purchase price will gladly be formulated by your advisor, because this is where negotiations begin.
If the prospective buyer shows further interest in your company, we will accept an offer for you. This offer is usually dependent on one or more conditions. Usually the buyer checks your financial records accurately, rental agreements or wants to clarify other pertinent details.
We will present all offers that for your business and consider all the pros and cons with you. At first glance, you might not be pleased with everything. Some details might not fit your needs, but others more so.
Nevertheless, greater scrutiny always helps and to make a mature decision. You can either reject the offer, make a counter offer, or accept it.
If you found an agreement with the buyer, we will get back together with you so that the conditions are met quickly. Some buyers take this opportunity to involve external consultants. It is very important that you take part in this process, otherwise there is a risk that the buyer becomes suspicious and starts looking for undisclosed secrets.
Once all conditions are met, the acquisition agreements are prepared and signed. All contracts will be signed, the payment and the company will be transferred to the buyer.