As 2020 draws to a close, most business owners are looking back on the past year with a mixture of relief and anxiety — relief that they survived the coronavirus pandemic with their company intact, and anxiety about what the coming year will bring.
For those who were already considering stepping back from an active role as the owner of a company, the uncertainty of the current climate has, in many cases, provided the final push to sell their business altogether.
But once the decision to sell has been made, there are a number of questions that immediately arise. How do you determine the actual value of your business? How do you advertise the sale without damaging your relationships with customers, clients, and staff? Is it possible to contact potential buyers directly?
If you want to know how to sell your business during these uncertain times, here are three key steps you should follow to get the most out of your divestiture.
1. Get a Proper Valuation
You can’t make a good deal on something if you don’t know what its current market value is. Self-made entrepreneurs often know a great deal about their customer base and the industry they operate in, while not having an up-to-date understanding of what kind of price their brand can command.
This is even more true during a period of historic market uncertainty, where the future of entire industries seems to be up in the air. Getting a professional business valuation will ensure that you have a solid understanding of what your business is worth in the current market, which will help you make more informed decisions when it comes time to negotiate with potential buyers.
2. Don’t Publicize Your Decision
No matter what size of business you own, having the word get out that you’re planning to sell can have unintended consequences that can cause major problems in the day-to-day running of your company. Your employees might start looking for positions elsewhere, your suppliers might prepare to renegotiate contracts, and your competitors use this information to gain an advantage over you.
Fortunately, there are tools you can use to market your business confidentially, such as blind business profiles, confidentiality agreements, and directing potential buyers toward a non-business phone number and P.O. boxes.
3. Work with a Broker
Divesting is a major business deal, so you need to have someone in your corner who understands the market and can negotiate on your behalf. Business brokers can provide you with a team of legal and sales experts who can take you through every step of the process, including:
- Valuation
- Confidential marketing
- Facilitating due diligence
- Negotiating terms of agreement
Especially in the case of small- to medium-sized businesses, brokers play an outsized role in helping owners negotiate a favorable deal. This is especially true now, at a time when many business owners are looking to divest and buyers have a lot more choice.
The decision to sell a business you’ve spent years of your life building should not be made lightly. But once this course of action has been decided, it’s important to do it right.
Making sure the business is professionally valued, keeping the sale confidential, and working with a broker to find buyers and negotiate terms is the best way to ensure you won’t regret your decision.
