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Small Business Owners
Looking to Sell Their Business

There are a number of items that need to be considered when selling a business.

Identify why you want to sell your business and make sure it’s ready to be sold. You should ask yourself what you want out of life and be realistic as to your goals. In some cases you just need more vacations to re-charge. In other cases you need to sell for money or retirement issues. All of these should be discussed with your friends and partner. However, remember that some people will not want you to sell your business for selfish reasons.

Take the time you need to prepare your business for sale. This is a crucial time to make sure that you have painted the facility, thrown away any junk and scrub the bathrooms. Buyers will typically think that if the facility looks bad, then the financials are also poor or suspect. Go through your files and make sure that you have your major files ready for any new buyer (licenses, leases, contact information, etc). There is nothing worse than having a buyer ask for information and the seller does not have it or does not know where it is. It slows down the selling process and buyers will move on.

In addition, you will need to clean up the financials. Have your financials compiled on a CPA letterhead. Get rid of non operating assets on the balance sheet.

Determine the value of your business, and consider hiring a business valuation specialist. This is probably the most important step of all. Frazier Capital has valued companies for the last 25 years in almost every state in the United States and in over 300 industries. Many times sellers think that the business is worth more than it is. Having a third party bring a realistic valuation maintains expectations.

Decide whether you want to hire a broker or negotiate the deal yourself. Hiring a broker can be favorable since they have access to buyers as well as helping you focus on increasing the cash flow of the business. Handling the sale of a business yourself is difficult and time consuming.

Once you find a good buyer, there are a series of financial screenings and other steps that need to be taken to keep the process moving. The potential buyer needs to be qualified if they: (1) have the funds in order to purchase the business, and; (2) whether they have the experience to run the business.

Take the time to work with a financial professional and determine how you want to invest or otherwise use the money you make from the sale of your business. As the process goes into escrow you will need to ask your CPA or tax expert about the tax consequences of the sale.

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