SELLING YOUR BUSINESS FOR TOP DOLLAR by chique147

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									    SELLING YOUR BUSINESS FOR TOP DOLLARS
Maybe personal reasons, such as retirement or a desire   to do something
different, say it's time to go. Or maybe you are being   pursued by an
interested buyer. Make your departure count the most -   financially
speaking - by getting the best price for your company.   Here are some
points to help you understand the process.

Lay the Ground Work
The value of what you have to sell depends on how well you've developed
your business. Prospective buyers are going to check you out thoroughly
(this is referred as due diligence), so be prepared.

Prospective buyers want to look not only at your operations and sales
figures; if they're serious about going forward they'll demand to see
your books (this generally happens only after a particular buyer signs a
letter of intent). The financial story you tell with your books starts
years before you even consider a sale.

Caution: Some business owners fail to record all of their revenue because
they keep sloppy books or are trying to hide income to minimize taxes.
Besides the obvious tax evasion issue, inaccurate or incomplete books can
undermine your ability to get top dollar for the sale of your company.
Unless the numbers in your books support your claims (you say your
company is generating $500,000 in revenue but your books say only
$100,000), a buyer won't pay what could have been an attractive price for
your company.

Valuation
Your business is worth more than the desks, computers, and bank account
you have. A company's value includes many intangibles - your brand, your
customer list, your earning power, and more. What's your business worth?
You need to have a good idea so you can ask an appropriate price.

You can get a rough idea about the value of your business using a free
online tool from BizEquity. Enter some general financial information
about your business for the past three years and learn approximately
where you stand. Or you can purchase inexpensive software that will
generate a business appraisal based on the data you input.

For a personalized valuation, you'll need to turn to a valuation expert.
Your accountant may be able to provide some insight, based on your
numbers. Or you may want to use someone who specializes in valuation. In
this case, expect to pay $5,000 and up for a complete report, depending
on the complexity of your business situation, or as little as $1,000 for
a preliminary report of a simple business. Find licensed valuation
experts.


Business Brokers
Should you try to sell the company yourself or use an expert? Like
selling a home, some owners have success doing it on their own, but
unless a suitor comes calling for you, most sellers use a broker.
Do It Yourself. If you go it alone, first look within your organization
for a buyer. A relative or a key employee may be itching to take over
your company; just give him or her the chance.

Finding strangers who may have an interest in buying your business takes
effort on your part. Consider using an online business posting site, such
as BusinessBroker.net or eBusiness For Sale By Owner.

Business Brokers. If you want a pro to find you prospects and vet them so
you eliminate the tire-kickers, work with a business broker. This person
acts as your agent to find you suitable people interested in buying your
business. Expect to pay a broker an hourly fee, a retainer, or a success
fee, which is a commission based on the sale price of your business when
the sale closes; a commission is the most common payment arrangement. The
commission ranges from 5% to 12%, with the rate for most small business
sales somewhere around 10%. Note: Some states require business brokers to
be licensed, but most do not, so use caution before you work with anyone.

Financing
How will you get paid? Most sellers dream of receiving a certified check
for the full purchase price on the day they hand over the keys. The
reality is that many business purchases are paid over time and can
involve payments other than cash.

Installment sales. In today's tight credit market, in order to swing the
deal, you may be forced to become the banker for the transaction. Instead
of obtaining conventional financing, the buyer may look to you. If you're
willing to get paid out over time, you may not only ensure a sale, but
also obtain a tax advantage. By getting paid in installments, you'll be
able to spread the tax on your gain over the years in which you receive
payments. Of course, you'll need to take legal steps that allow you to
recoup the business if the buyer fails to make all of the payments.

Commercial funding. If your buyer is seeking a bank loan and you aren't
willing or able to make an installment sale, get ready to be patient. It
may take some time before a buyer can arrange for financing today, if at
all. Should one prospect's financing options fail, you'll have to start
all over again looking for another potential buyer.

Other payment methods. If you're bought out by a public company, you may
be paid in stock, cash, or a combination of both. Here, the transaction
can move more quickly than for a buyer seeking conventional financing,
but you'll be restricted on your ability to sell the stock you receive.

Bottom line
Before you agree to a sale, be sure you bring in your advisors - your
accountant and attorney - who can help you review the terms of the sale
and be sure you protect your interests. The process - from the moment you
decide to sell until you close the deal - could take a couple of months
or much longer, so be prepared to continue running your business well
throughout this period.

								
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