Before selling your business, make sure you’re doing it for the right reasons. Are you ready to retire or are you simply bored and seeking a new challenge? Beyond understanding your motivation for selling you need to know your business’s value before you can do anything. Scheduling a valuation is your first step to achieving your goal.
A business valuation is the calculation of the economic value of a business conducted by a third party with ABV credentials. As a business owner, it’s only natural to feel sentimental about what you worked so hard to build over the years. Try not to be offended if the valuation comes in lower than you expect. The professional you select to conduct the valuation will be looking at either company assets, the earning ability of the business, or the market worth of the business to determine the value. There will be no emotions involved in a valuation.
Next, you need to identify potential buyers. You may already know someone through business networking who is interested in buying a business. Selling to employees is an appealing option for owners who have a tight-knit team. There are online marketplaces where buyers and sellers can connect and initiate deals. A less cost-effective way to sell your business would be to hire a business broker. The typical fee for this service is between 10 to 20 percent of the total sale price. But at least you have choices.
If you’re not sure that now is the time to sell your business, you can step down as manager and CEO to a less demanding role. Or you could transfer ownership of your business to a family member and stay on to consult as needed while exploring other interests. If selling your business is something you want to do, we would love to help. Call Alloy Investment Management at 800-689-3935 and will be with you every step of the way!