When you have made the decision to sell your business, marketing to find a buyer is imperative. You might think this is a one step process; however, there’s significantly more involved in the marketing strategy to find a buyer. Finding a qualified business broker, preparing the selling memorandum, and determining how you will structure the sale are all important in finding a buyer.
Finding a qualified business broker
Although you may think you are a great sales person and you can sell the business on your own. It’s important to understand that selling a business is a job in itself. In addition, to taking time away from managing the business, it can create confusion with your customers, suppliers, and employees when you advertise your business is for sale. For example, your customers may decide to look elsewhere for the same products, because of the uncertainty created by your business being for sale. Your suppliers may feel nervous that you are having financial difficulties and be reluctant to continue as your supplier. Finally, your employees may become unproductive or key employees may even leave for another employment opportunity. As you can see, there are too many factors at risk when you try to sell your own business.
When you hire a business broker, advertising the sale of your business is done under the broker’s name. A business broker has more resources available when it comes to marketing. In addition, a business broker will have many online platforms available for marketing the sale of your business.
The selling memorandum
The selling memorandum is very similar to a business plan; however, the goal is to sell your business in lieu of starting one. You should prepare a selling memorandum for three reasons. The first is that it helps you understand what you are going to sell. The second is that it gives the business broker a better understanding of what your goals are. The third is that the buyer has a clear picture of what he is buying.
The elements of the selling memorandum include the following:
- Executive summary;
- Reason for selling;
- Facts about company’s history, structure, and operations;
- Asking price and terms;
- Your industry, market, and products;
- Your employees and assets;
- Financial statements (both past and forecasted);
- Any additional information that will support who you are and why your business is a great opportunity.
Define the Terms of the Sale
Including a list of your requirements in your selling memorandum will prevent buyers from wasting your time. The terms include the assets that you’re selling and whether your key contracts are transferable to the buyer. If you’re a corporation, the terms will include whether you’re selling assets or stock.
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