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7 Steps to Prepare Your Business for Sale

Putting your business up for sale is a major decision with implications that extend far beyond the financial considerations. Selling your company affects not only your future but the future of your valued employees. What’s more, letting go of a business you’ve grown for years or even decades can be a difficult process.

First, you need to consider whether you are truly ready to sell your business. Talk to family members and others who care about your future and may have a stake in your decision. Working through any personal concerns before proceeding will make the entire process a lot easier.

Once you have decided to sell, addressing the following practical considerations will put you in the best position to get the deal you want:

1. Consider your potential buyers

As you begin the process of attracting a buyer, make a list of individuals and companies that you believe would be interested in acquiring your company. While you should work through an intermediary (broker, bank, etc.) to contact these companies when you are ready, the exercise will help you to begin thinking about who your potential buyers are and what will attract them to your business.

2. Accentuate the positive

To present your business to a potential buyer, you must be able to explain the qualities that set your company apart and give it unique value. These may include your customer list, proprietary innovations or even a strategic location.  Once you have identified these strong points, work to refine and improve them so they will shine even brighter. At the same time, consider cutting out less successful segments of your business so that you can focus on efficiency and profitability.

Your company’s history will also interest buyers. Think about how to best present the story of your original goals and aspirations for the business, the successes and failures that brought you to this point and the company culture you have fostered along the way.

If your business is in South Carolina, out-of-state buyers may be attracted by the benefits of doing business in the Palmetto State. Be prepared to highlight South Carolina’s 5 percent corporate tax rate, robust incentive programs for expansion and strong support network for businesses of all sizes.

3. Anticipate a buyer’s key concerns

Even as you focus on the positive, a savvy buyer will be looking for a realistic forecast of the company’s future.  Evaluate the trends in your revenues, expenses and customer base so you can present projections that are supported by the numbers.

Consider the diversification of revenue among your clients. If one client makes up 90 percent of your income, a buyer is going to be looking for assurances that the account isn’t going anywhere. If there is time to add key clients or grow the current ones, it may make all the difference.

Be prepared to answer any other probing questions that could come up during due diligence. If buyers get the feeling that they aren’t getting the full picture, they are likely to walk away from the deal table.

4. Know what you want

Take steps to establish a reasonable market value for your company. Business brokers, professional appraisers and experienced accountants can all offer sound advice.

Your expectations for the sale may not be limited to the purchase price. Are you willing to stick around for a transition period under the new owner? Are you prepared to sell all the assets of the business, including any related real property? These types of questions may be crucial to closing the sale, depending on the buyer’s requirements.

5. Make plans for after the sale

A successful sale should include a plan to limit the impact of your departure from the company. Creating systems to govern critical operations and documenting them in employee handbooks or operations manuals will help to solidify processes that have made the business successful.

Developing a plan to retain key employees may also be crucial to the continuing success of the company. Offering strong financial incentives and even leveraging your relationship with the employees can help the buyer hold on to the personnel it needs to ensure a smooth transition.

6. Get your accounting house in order

A buyer will want to take a good look at your books, so make sure that you are prepared to present your numbers clearly and effectively. In preparation for the process, you will need to gather and organize your company’s financials, including organizational and operational documents, tax returns and property records.

7. Surround yourself with experience

The process of selling your business doesn’t happen overnight. Preparations to position your business for sale should begin years before a deal is done. The counsel of a trusted accountant and transactional attorney will be invaluable as you navigate the process of selling your company.

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