How to Find the Right Buyer and Secure the Best Price for Your Company

Selling a business that you have started from scratch or spent a good part of your life to build can be stressful. You want to find the right buyer who will keep things going while still getting the best possible price when you’re ready to cash out all that sweat equity.

Planning for the sale of your business should begin several years before you hope to sell. Here are some tips on finding the best potential buyers and getting the best possible price:

Identify Potential Buyers

Finding the right buyer will entail giving some thought to whom the ideal prospect might be among several possible pools of candidates, including:

• Current business partners
• Key employees
• Members of your family
• Outside investors

After you create a list of potential buyers, then consider how each of these candidates could probably pay for the company. When you plan ahead, you have more options.

Determine a Value

You will eventually have to hire a professional to provide a valuation of your business before you sell it. But before that happens, you need to be sure that you have the business in good enough shape to obtain the best possible valuation:

• Evaluate your accounting practices, including audit and control procedures. Bring in outside auditors to identify any financial issues.
• Retaining key employees may be important to a prospective buyer, so structure and document your employee compensation plans accordingly.
• Review your existing retirement plans and deferred compensation agreements.

Take a Step Back

Buyers are less likely to want to buy a business that relies solely on your talents. You will need to find ways to limit the impact of your departure on the business by:

• Developing skills of current key employees.
• Putting systems in place to minimize the risk of customer service interruptions.
• Developing/updating employee handbooks and operations manuals.
• Creating teams within the organization that can function without your guidance.

Identify the aspects of your business that rely primarily on your presence and find ways to step back from those by grooming the next level of management.

Consider Your Own Needs

If you do not currently have an estate plan, or have one that hasn’t been updated in the last few years, now is the time to meet with an estate planning attorney. You will need to review your retirement goals and determine how much you will need to get out of the business to support your retirement lifestyle. You will also need to consider factors like health insurance and taxes.