Whether you want to retire and there’s no one to pass the torch to, or you’re simply burnt out and ready to seek a new adventure, you’ve probably considered the possibility of selling your business. But if you’re not lucky enough to receive a generous offer out of the blue, what would you need to do to find a buyer? If you’re ready to move on, here are some strategies for selling your business.
Get a formal valuation. Potential buyers aren’t likely to take your word for it when you say what your company is worth. Instead, request a business valuation from a reputable company that’s been accredited by the American Society of Appraisers. A business valuation expert will look at data like your financial reports and business assets to determine a fair value for your business. This will help you to support your asking price, assuming it’s a reasonable match — but if the valuation is considerably lower than you expected, you may want to either get a second opinion or lower your expectations.
Put the word out. Start spreading the word about your intent to sell among your friends, acquaintances, and business contacts. In some cases, a long-term employee might be eager to take the business over, or a contact in a related industry may be interested in buying you out. If someone you know expresses interest, hold a few meetings to make sure that he or she is truly serious before preparing a formal sale offer. Due diligence can take months to complete.
Advertise in relevant forums. In most cases, you won’t find a buyer among your immediate circle of acquaintances, so it will be necessary to market the business among a broader audience. Look for magazines, websites, and newspapers geared towards small business owners within your niche, and take out advertisements. If you own a bed and breakfast, for instance, you’ll find numerous websites and magazines for B&B owners that accept ads promoting B&Bs for sale.
Find a business broker. If you’ve had no luck with your own contacts or with advertising, it could be time to hire a business broker to help you find the right buyer for your company. A business broker acts as an intermediary between you and your buyer, and can assist you by appraising your business’ value (particularly helpful if you haven’t already gotten a formal valuation), marketing the company, and handling all initial contact with potential buyers. If you want to sell your business without letting competitors know about it, working with a business broker can ensure confidentiality. This method isn’t cheap: A business broker’s fee typically ranges from 15 to 20 percent of the business’ purchase price. However, if you’re not having luck selling the company independently and your efforts to market the business are detracting from day-to-day operations, a broker may be a good option for you. To find the right broker for your company, search the International Business Brokers Association’s member directory for a broker with relevant sales experience.