Selling a business is far from easy
Sometimes selling your business can make sense in theory, but the process can fall apart if all the pieces aren’t in place ahead of time. For this reason, entrepreneurs who want to sell their business should have several factors worked out ahead of time. A buyer is expected to do “due diligence”; which means it will conduct a confidential, in-depth look at your business and try to get a read on your management team. Here’s a few guidelines to help you start the process.
1. Expect your dirty laundry to be exposed
From contracts, to litigation, to human resource issues to patents to competition, a business owner should expect the buyer to dig up these issues during the due diligence process. Having a due diligence checklist can guide you to what you need to provide and how it should be organised. Be honest and upfront; you know who your competition is, so tell the buyer, and identify any soft spots in advance.
2. Work with an experienced expert
Take a closer a look at your accountants and solicitors. Have they handled acquisition transactions like this before? This is important to know since there are major tax, legal, human resources and operating issues involved in selling your business, and you want everything to go smoothly. If the transaction is large enough, you may also want to consider an investment banker to advise you. The seller will also want someone in his corner who has done this before and who can gauge the fairness or reasonableness of what is being offered.
3. Have a human resource plan
The sale process can be distracting and even disruptive to your employees and staff. Before embarking on a sale, decide how and when to tie them in on it. While you might do some of the preliminary, exploratory work on the down-low, your employees will eventually want to know what will happen to them and their positions. But, informing them too early on in the process can be a bad thing, since distracted employees can cause your business to suffer.