If you're an entrepreneur, you might find yourself considering selling your business. It might be you're ready to take your next career or even approaching retirement. The best way is to find a buyer who will take responsibility for the company you spent time and resources to develop.
You might know that it is the right time to sell the business, however, that doesn't mean its an easy decision you'll make. Nevertheless, there are critical practical elements to consider such as strategies of incoming management, financial arrangement, documents needed for selling a business, among others. But importantly, can learn more at ExitAdviser on selling a business.
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Agreements
Sometimes, you might want to opt-out of day-to-day operations but retain a position for consultation. That will ensure your business will stay in the original vision.
However, you can also determine whether you want to serve as a consultant to earn a salary or for free. Therefore, draw an agreement of the terms before you sell the business.
The buyer might want you to sign no competition agreement so that you might not open or work for existing competition after you sell the business.
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Selling Price
Before you decide on the amount to sell the business, look for annual earnings, assets, and potential for growth. If the business has accrued debt purchasing equipment consider whether you will sell them separately to clear the debt.
Hire an accountant experienced with quality taxes who can analyze the amount of taxes to be paid in the process of selling the business.
If you're running a small business, you might have a disadvantage of capital gain taxes while selling a business and thus reducing profits. Therefore, hiring a tax accountant will help to structure the business to lower the amount of taxes.
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Assets
If you're preparing a business for sale, consider the assets before advertising a business for sale. However, some items such as vendor relationships, seasoned employees, and customer lists are not considered asset sales during business valuation.
If space, where the business is running, belongs to you, it can be sold as an asset or rent to the new business owner. Trademarks and patents that are related to your business should be sold or licensed to the buyer to enable you retail ownership.
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Employees
If you have employed employees, what will happen to them after you decide to sell a business? If they are long-term employees you can provide job security to them in the process of selling the business.
Additionally, if you have invested in training employees can be considered as assets while selling the business. You, therefore, have to look for employees before you sell the business. You might have an employee who knows the inside out of the business and might want to purchase it after you help them secure financing and initial guidance after the purchase is complete.
Bottom line
Different reasons might make you sell your business such as when planning to retire, getting profit financially, or want to pursue other business ventures. Unless you're in extreme circumstances, don't decide to sell your business hastily. Multiple factors are determining the investor you will choose to sell your business and the conditions of sale.
