Step 1: Have a Plan for Selling Your Business

To start, you’ll need to create a plan for selling. You’ll determine how much you’d like the business to sell for and conduct a full valuation to see if your business can reasonably command that price. You’ll need to gather all your business data, including tax statements, business plans, strategies and training, and everything else that can be considered in the assets. Learn more about when to sell your business.

If that valuation concludes you can’t get the price you were hoping for if you sell now, your plan will include steps to increase the value of your business before you put it up for sale.

You’ll need to recast your financial statements since your tax documents are usually prepared with an eye to showing the lowest profits possible. That’s great for taxes, but the worst possible strategy when you’re trying to convince a buyer that your business is worth buying. All your company’s finances will need to be presented in a light that makes them appealing to buyers.

Finally, you’ll prepare an Executive Summary of your business and a Confidential Business Review. Only then are you prepared to seek out potential buyers?

Step 2: Do a Search

If you don’t have a plan for finding qualified buyers, now’s the time to invent one. You’ll need to track down buyers who are interested in your type of business, preferably ones who are likely to have the financial means to invest. You’ll distribute your Executive Summary to those buyers – so it needs to be very compelling since it’s the bait you’re dangling to hook your big fish.

Once a buyer bites, you’ll need to qualify the buyer to be sure he can afford your business. You’ll also agree to send him your company’s Confidential Business Review after the buyer signs an NDA or Confidentiality Agreement. Make sure yours is iron-clad – or all your business secrets could disappear. See some factors to consider when deciding to sell your business.

You’ll need to determine how interested the buyer is, which can be difficult since they often lie about their level of interest while simultaneously entertaining other offers. If you do get a buyer who’s willing to move forward, though, it’s time to make a deal.

Step 3: Make a Deal

You’ll conduct an initial meeting with your buyer and give them a tour of your business. Once again, you’re going to need to gauge how interested the buyer really is, particularly if you have other offers. If you reject a second buyer because you think this one will pay a higher price, you could lose out when the first buyer bails at the last minute.

If you’re confident, you’ll motivate the buyer to act by giving a firm purchase offer. You’ll then negotiate a price and, if successful, you’ll write up an LOI or Asset Purchase Agreement to seal the deal.

Step 4: Close the Deal

Once more, you’ll need to open due diligence. Your buyer will need to apply for financing if they need it and obtain lender instructions. You’ll open Escrow, start the Bulk Sale process, and – if all the paperwork is filed properly, every i is dotted and every t is crossed, you’ll finally sign the final documents.