Should You Consider Selling Your Business?
The decision to sell a business is often a difficult one because of the profound personal and financial impact. Many different influences bring business owners to this decision, including:
• Serious illness or disability
• Personal preference of the owners to retire
• Divorce or dissolving of partnership
• Lack of sufficient working capital
• Secure the future by cashing out
• Worrisome exposure to business risks
• Owner’s desire to pursue other business interests
How much is your business worth?
Buyers ask countless questions, but they are primarily concerned with a fair return on their total investment. In addition, prospective buyers make many judgments about market position, proprietary know-how, competitive strengths, quality of the assets, growth potential, and risks of the business.
To accurately determine the true worth of a business, the company’s accounting reports, prepared primarily for tax purposes, must be restated to reflect the true financial performance of the business.
CII’s Professional Business Intermediaries are well trained to perform business valuations. They use as many as four valuation models to determine the most probable selling price. The valuation will help prospective buyers understand the reasons for such value and structure a sale for the maximum benefit of buyer and seller.
Sound working relations with employees, customers, suppliers, and bankers are important factors to a company. Any premature indication of a possible change in ownership could disrupt these relations and weaken the company’s competitive position. For these reasons, and many others, confidentiality is critically important at all stages. With the proper procedures, it is possible to minimize the risk of an untimely disclosure.
In every transaction, there is an appropriate time to reveal that a sale may be imminent. Proper timing of these sensitive announcements can contribute to a smooth transaction and reinforce the buyer’s willingness to proceed to a closing.
Your CII Business Advisor helps to ensure that information is kept confidential throughout the entire selling process until it is appropriate to reveal that a sale is forthcoming.
When is the best time to sell?
Usually the best time to obtain the highest price occurs when sales and earnings have been maximized. A solid earnings trend will enable a buyer to pay a higher price and still meet his return of investment criteria. A history of good performance also gives the buyer confidence in projected future earnings.
However, market conditions for business sales also significantly affect the salability of a business.
Who would buy it?
Based on our experience in selling businesses, approximately 80% of the prospective buyers are individuals who want to control their own future.
There are also several categories of prospective buyers. The most obvious are other companies in the same business for which the acquisition would be a logical expansion with potential economies of scale. Private Equity Groups and other types of investors have been buying in record numbers due to historically low interest rates.
Your CII Business Intermediary has access to CII’s extensive database of all categories of buyers. We utilize effective search procedures to find and screen those who are best qualified to buy your business.