Key Tips: Sell My Wholesale Distribution Business
If you are a business owner in California and have decided to sell your wholesale distribution company, we have identified key tips to get you started.
Sell My Distribution Business
Selling a California distribution business is not as easy as selling a house. It requires adequate planning and getting help from an intermediary, preferably a professional and licensed business broker.
A California broker will assist you from the beginning to the end of the process.
Wholesale distribution business owners tend to face several challenges when they attempt to sell their companies by themselves. Most times, the owners don’t know how to value a wholesale distribution business; hence, calculating the distribution business’ worth becomes a challenge.
With the help of a licensed and qualified business intermediary, the process becomes more straightforward. The top 5 main reasons why a business owner in California may decide to sell a wholesale distribution business includes:
- Low revenue
- Death of the original owner of the business
- Partner problems
Increase My Wholesale Distribution Business Value
It is a bad idea to make drastic changes to your company at the last minute when you decide to sell your business. Instead, you should properly plan and prepare for the business exit.
Firstly, you need to seek advice from an experienced California business advisor on possible ways to boost the business’s profits to attract more potential buyers. To increase your company’s profit, you must work closely with the business intermediary to develop a strategy to boost your sales and reduce expenses.
You can explore new markets and offer new services or products to boost your sales. Do not assume that it is okay to stop investing in the business because you’ve decided to sell. Once you stop investing in equipment and strategies that’ll improve your business, its values begin to drop, and you’ll get fewer potential buyers.
While investing in your business, do not forget to train your staff and encourage them to create repeatable and teachable processes. It may be challenging to find a buyer for your business if it cannot function properly without you.
Sell My Wholesale Distribution Business in 5 Steps
So, how can I sell my wholesale distribution business in California? If you’ve decided to sell your distribution enterprise, there are five critical steps to follow for the process to go smoothly.
1. Evaluate Your Enterprise
The first step you must take when selling a distribution company is to determine your business’ worth. We recommend that you hire a professional business valuation service, so you don’t have to figure out how to value a wholesale business on your own.
Professional valuation companies and brokerage firms are experts in evaluating and selling businesses. They have an excellent understanding of how many people in your industry sold their companies in the past. They can also help you to analyze, organize, and present your company’s financial statement to potential buyers in the best way possible.
Evaluating your business’ worth is more straightforward if you properly monitor its asset, monthly or yearly revenue, and potentials. Without first assessing your company’s worth, you’re unlikely to find a reputable buyer. Learn more about calculating your wholesale distribution company’s worth.
2. Make a Summary of your Business Operations
One thing a buyer considers when buying a business is how the wholesale distribution business works. As a business owner who’s ready to sell the company, you should summarize how you operate the business. Do not state too much in the summary, but do not withhold important information either.
If you reveal too much information and the transaction falls through, you risk damaging your firm and all the effort and investment you’ve put into it.
3. Get Your Documents in Order
Before successfully selling a distribution company in California, you need to organize all the applicable legal documents, including licenses and permits. Any serious buyer will demand to see all the legal backings that the company has acquired while under your ownership.
Some of the essential documents you need to provide when selling your business include financial reports clearly stating the company’s potential revenue, future planning, and other details that may give insight into the company’s potential growth.
4. Market and List a Wholesale Distribution Business For Sale
With all the essential documents ready, it’s time for the next step in the selling process, listing or marketing your business to potential buyers. A strategy you can borrow from business brokers is to present the company with the summary you prepared, stating significant benefits the potential buyers stand to gain.
However, be careful not to expose too much about your company as this may put your business at risk from competitors, which may negatively impact the business. Do not include details such as company websites, awards for service levels, or media recognition when listing your business for sale.
5. Invite Qualified Strategic Buyers for Assessment
It is okay to allow your buyers to assess the company’s operation after all the concerned parties have negotiated and agreed on an offer when selling your distribution business Usually, it helps if you give the buyers time to finalize their decision.
Some buyers might also need some time to get money from third parties to fund the transaction.
Business Brokerage Services
If you’ve chosen to work with a business brokerage company, you must understand what they do and how they can help you sell your California distribution business. First, let’s start with what they do.
A business brokerage firm gives clients advice when they attempt to buy or sell a business or enter a corporate restructuring or financing event. In other words, they serve as middlemen buyers and sellers in a business sale transaction. Aside from that, Brokerage companies help their customers with mergers and acquisition issues, including equity financing and debt.
If your business value is between $500k to $4m, then it is known as a Mainstreet business.
During the sale of a business, here are the top three services you can expect from a brokerage firm:
- They help the business owners find their company’s worth
- Brokerage firms leverage the best possible price for the seller
- They also match the sellers to list and market the business with potential buyers
California business owners may decide to sell their distribution business for various reasons, including retirement, change in aspirations, etc. Whatever your reason for selling, you must hire a reputable brokerage firm to assist you through the process.
Such firms will help you value your business accurately, and you’ll receive the best value for the company. It is also crucial that you carefully summarize how the company works and prepare your legal documents and staff for success in the selling process.
When you sell your business successfully, you’re likely to be taxed on the profit you made from selling the business. Therefore, it’s essential to seek professional advice from a California brokerage and advisory firm on reducing the amount of tax you’ll pay.
Hiring a California business brokerage firm such as Rogerson Business Services also increases your chances of selling the distribution business successfully. At Rogerson Business Services, we will sell a wholesale distribution company at the best possible valuation.
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