What five things should you consider when selling your business?
Selling a privately held business is a daunting, often once-in-a-lifetime task. The successful sale can be extremely rewarding, but it uncovers numerous issues that require careful consideration. If your business has EBITDA north of $500,000, it deserves a thoughtful, carefully crafted sell-side M&A strategy. Five areas demand your attention.
1. Your purpose, experience and skills — you are an expert at leading and growing your business, but most owners have never sold one; stepping into M&A can feel like learning a foreign language overnight
2. Fundamentals to master — proving a valuation, understanding the need for confidentiality, knowing the marketplace, attracting and securing motivated buyers, grasping corporate and commercial finance, and the art and science of negotiation
3. Documentation to prepare — profit-and-loss statements, balance sheets and cash flow statements for the current and past three to five years, seven years of business tax returns, leases, insurance policies, a standard NDA, an executive summary and detailed business profile, supplier and employment contracts, and intellectual property records
4. Personal considerations — wealth maximization and protection, taxes, risk assessment, retirement, investments, estate and succession
5. A trusted advisor network — a qualified M&A advisor well versed in these areas helps you understand the bigger picture and develop a holistic strategy toward a successful sale
Key facts: five things to consider when selling
A sell-side M&A strategy is warranted for businesses with EBITDA above $500,000
Fundamentals: valuation, confidentiality, market knowledge, buyer sourcing, finance, negotiation
Documents: three to five years of financials, seven years of tax returns, leases, contracts, IP, NDA, business profile
Plan personal matters (tax, estate, retirement) and build a trusted M&A advisor network
Disclaimer: This article is for general informational purposes only and does not constitute legal, tax or financial advice. Consult qualified advisors regarding your specific circumstances.
