Eleven Important Tips When Selling Your Own Business

1. Price realistically. You certainly don’t want to price your business too cheaply, but you can also come out short if you price it too high because you will scare away a lot of qualified buyers. If it’s overpriced, the business will be on the market for a long time if it ever sells at all. And the longer it’s on the market the greater the risk of your employees or customers finding out. Look for comparable sales and compare selling prices with your own business.
2. Prepare a business offering package. All the information that buyers will need to see such as lease and profit and loss statement should be quickly available because buyers will lose enthusiasm if they have to wait.
3. Do all the deferred maintenance before putting the business up for sale. If buyers look around your business and right away they see items that need fixing then they often wonder what else needs fixing that they can’t see.
4. Prepare a purchase agreement before you find a buyer and fill in the blanks when you have a deal. Attorneys are sometimes very slow in putting agreements together and again a buyers enthusiasm can evaporate if the purchase is delayed.
5. Look for a buyer in as broad an area as possible. Don’t depend solely on your local paper to produce leads because only a fraction of the potential buyers are reading your paper at any particular time. The way to get the best price is to attract as many qualified buyers as possible.
6. Qualify your buyers right away. You need to know about their financial strength and business skills before you give out confidential information on your business.
7. Make sure your space and equipment leases are transferable before you look for a buyer. Many, many potential sales have blown up because a landlord refused to assign a lease. If your remaining lease term is short term negotiate a new lease first.
8. Make a deal with the buyer first before you give him access to your financial records. It is extremely important that the buyer has ample opportunity to examine your business. If he doesn’t and the business fails later he may well sue you for misrepresentation and fraud.
9. Make sure that every part of the transaction is in writing, including all contingency removals. People quickly forget what was said and not written which frequently leads to arguments and then lawsuits.
10. Always take a substantial deposit when you have reached an agreement with a buyer. The deposit should be held by a neutral escrow holder to help limit your liability.
11. Make sure if you are doing any financing of the sale, that all the correct procedures are followed to protect your note. These include filing of a UCC1 statement with the State of California, suitable promissory notes, security agreements, etc.