The 5 Phases of Selling Your Business

Selling a business is difficult today.  This post discusses a process that involves five distinct phases steps}.

Doing things up front

The more you complete at the beginning, the better chance you’ll stand of selling a business.

The 1st Phase

In the initial meeting, your California business broker and you will talk about things like your your employees, your market, and your financial history. His goal is to understand your strengths and weaknesses, as well as how your business will or won’t sell in today’s market.

You should hear an honest appraisal of your chances of selling your business, and whether or not you need go back to increase the value of your business before proceeding.

The Second Step

Step 2 is where effective California business brokers doe a enormous amount of research about industry and business.  He’ll look at your financial records, and look at comparables in your area. The purpose is to assess your business, and how well it will sell in the market. Then, you’ll get a short list of things you can do to increase the value of your business.

In this step, you’ll decide when will be the right time to sell a business.

The Third Phase

First: Get the agreement signed

I hope that you hadn’t signed an official agreement with your broker before this phase.  Now is when you’ll actually sign on the dotted line with your business broker to get rolling on the sale.

Second: Build your marketing machine

Now, you and your broker will Get your marketing in order.

Your marketing materials is going to be a big “book” that’s up to 50 pages or more, and contains everything needed to sell your business.

You’ll include things like info about your plant, equipment, contracts and leases.

You’ll also list information about growth oppotunities, concerns, issues, and industry trends.

Third: Actively Promote your business.

You’ll get in touch with all possible buyers who you think may be interested in your business. You do want to make sure that they are qualified buyers, so that you’re not having to deal with inquiries from many unqualified buyers.

They’ll get a “blind summary” that provides them with enough information they’ll need to make a go/no go decision, and whether or not they want to continue with the sales process.

Fourth: Narrow the list of buyers

Next, narrow your list of potential buyers, based on their ability to buy and their interest in buying.

Fifth: Meet with possible buyers

You’ll have a meeting with qualified buyers, often in person, or possibly by phone. They’ll grill you for data about your business and decide if they want to submit a formal proprosal.

Sixth: Create a bidding war for your business

Get everyone to submit a bid at the same time.  This ensures that you’ll have several qualified proposals from which to choose.

The Fourth Phase: Due Diligence

The due diligence phase is where the buyers get to tear your business apart. They’ll look at every last detail of your financials, and every aspect of your business.

They’re actually looking for issues, which, if they’re interested in your business, gives them better reasons to lower their bid price for your business. That’s why you should do so much up front.

The Fifth Phase of Selling a Business: The Close

Finally… In conjunction with the previous phase, you’ll be preparing all the paperwork, conducting your final negotiations, and getting everything finalized to sign the papers and sell your business.

Related articles

• BizBuySell.com Report on Business-for-Sale Marketplace Suggests Flat Market in Third Quarter 2010 (prweb.com)
• Business Owners Looking to Sell Come Up Short (online.wsj.com)

Related posts:

1. Selling Your Business