Donna Genie walks campground owners through selling a business. Gather three years of tax returns and financial statements. Get a broker's valuation, not just your gut feeling. Use NDAs before sharing records with potential buyers, and stay professionally organized to close faster and get a better price.
If you're thinking of selling your business, now is the time to prepare. You can never be too early in getting your business positioned to sell well. So what will you need to have to get ready to put your business on the market? Well, whether you're selling it yourself or using a broker, you will guaranteed need three different items ready to go. First, your last three years of business tax returns. If you file as a schedule C as a sole proprietor, you'll also need your personal tax returns for the past three years. Next, you'll need financial statements, financial statements from the past three full years. And third, you'll need your financial statements from the current year to date. So it's important that that information is structured properly and professionally prepared or it looks like it should. Look, you don't want to scare off a potential buyer because they feel like you don't have good records. That's the fastest way to decrease your sales price. So those are the items you want to have prepared. Next up, you'll need to decide on a value for your business. How do you determine what the value is? Well, a number of different ways that you can approach that. First, if you're working with a broker, you'll want to get their opinion on what they think the sale value is. You may have your own internal values, but keep in mind that many times business owners value their businesses with emotion rather than numerics. So make sure that the profit that your business brings in is lined up to promote and substantiate a sale price that you're looking for. The other couple of things that you'll need to be aware of is the process of how you sell. Now you, you don't just take any person who contacts you about your business and say, here, here are my tax returns, here are my financials. You want to qualify potential buyers and this is why many people use brokers. There are a lot of tire kickers out there who don't have the means to buy your business but still want to talk to you about it. So you'll need a good way to qualify and make sure that any potential buyers who want to look at your business are serious and have the means to purchase it, whether that be that they have the cash or that they can get a loan to do it. So in the initial conversations that you may have with someone who's interested in buying your, keep that information a little tight to the chest. At this point. You want to make sure that you've got a qualified buyer. And in a lot of cases you may not be willing to put out a lot of information yet to somebody who wants to buy it. Perhaps you're trying to keep this quiet that you may be selling your business in order for you to release all of this information to help that potential buyer go through the due diligence process and see if your business is the right one for them to purchase, you'll want to make sure you have an NDA. An NDA stands for a non Disclosure agreement. This is something that typically will happen early on somebody expresses a little interest in yes, I may be interested in buying this. The NDA will generally require that that person put down a deposit, may or may not be refundable depending on the terms you agree in, and that they are not going to take the information they learn about your business and give it to your competition or anyone else, or use that information to recreate and start their own business. So you want to have a lawyer draw up that NDA agreement for you. Or if you're working with a broker who does this volume, they may already have that prepared for you. Once that buyer has signed that, that's when all the fun starts and you'll dive into the due diligence of letting them verify what's going on in your business. I will tell you that the businesses that I see that get the high dollar sales prices are the ones who are prepared for a quick due diligence process. The longer a due diligence process takes, the less likely it is that that business will sell. So have your ducks in a row and be professionally prepared for a sale that will help you get top dollar for your business. If you'd like to learn more about how to prepare, we offer services to help you get your business in line and basically take all of that information and wrap it with a pretty bow so that any buyer who looks at your business will be impressed and ready to.
