Financial Planning Business For Sale – Although selling a private business can be a time-consuming, complicated and emotional process, the personal and financial rewards for a business owner can be great. The key tool to successfully navigate the business marketing process is to start planning early. Selling a business can be very stressful for a business owner, and many business owners experience seller’s anxiety after the deal is completed. Even if a business owner doesn’t expect to sell the business for many years, putting the right plan in place can help increase the sale price and avoid headaches and stress down the road.
Keep the end goal in mind. Before immersing themselves in the intricate intricacies of the business marketing process, business owners need a deep understanding of what their personal financial planning needs and goals are after the sale and whether business monetization can actually get them there. Ideally, the sale of the business will result in income that A) replaces the income previously provided by the business to the business owner; B) to provide for a financial safety net in the event of unexpected financial developments; and C) finance goals such as charity, family wealth transfers or starting a new business.
Financial Planning Business For Sale
In a personal financial plan, it is best to project various expected values for various potential exit options (marketing, refinancing or other financing options) on an after-tax income basis, and then analyze how the profit from the sale will be under various projected market returns over time to see which goals can be financed with confidence and which goals are more likely. The plan must address various potential risks and various outcomes related to market returns, financing, risk tolerance and taxation.
Getting Ready To Sell Your Business — Planning To Wealth
Get your ducks in a row. By planning and organizing ahead of time, a business owner has a higher ability to increase the selling price of the business. If a business owner starts planning for a sale too late, a great opportunity to add value to the business may be missed. Setting up the management team so that the company is not too dependent on the business owner will make prospective buyers more comfortable. If the business owner can go on an unexpected long vacation without negatively affecting the business, then the business may be close to being ready for a sale.
Get your team on board with a business plan. Since business marketing can take a year, it will be disruptive to operations and morale if customers, suppliers and employees find out that you are planning a business marketing. However, you will probably want some key members of management to help you effectively plan and execute the sale, preferably also signing disclosure or confidentiality agreements. Ensuring that key employees can be properly retained and motivated through employment contracts and perhaps marketing incentives and/or stock options will make the company attractive to an outside buyer, allow the company to prepare for the sale and avoid last minute delays from key employees making a sale derailed . Any prospective buyer will want to avoid key employees leaving or competing with the new owner.
Many small companies have sales departments that rely on a few key people or a few large customers – “structuring” the company’s business strategy can make the company more valuable. Ideally, the customer base will be quite diverse, with contracts signed by major customers. The development of job manuals and employee manuals can help plan activities.
Improve the costs and terms for selling a business. Preparing the company’s documents and having the company’s finances audited by a reputable accounting firm will also be beneficial. A strong CFO/manager in place and reliable financial statements can help buyers get a good idea and avoid unexpected speed bumps later in the sales process. Your internal finance team will also need to implement a system change from trying to reduce accounting profit to lower taxes, to increasing profit to make the company attractive to buyers. Some legal structures are more optimal for marketing than others, so business owners should evaluate any potential changes early.
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Optimizing services for selling a business. This is also a group to explore different methods to improve efficiency. Listing non-essential business assets, such as company vacation homes and cars, identifying family members who earn above market salaries, controlling inventory levels and equipment costs, implementing high cost and financial controls, and eliminating non-core lines of business can make the company more attractive. make . to the buyers. Any business weakness must be addressed head on. It may make sense to separate tasks into different lines of business. This will make your business easier to understand and evaluate, which can lead to a higher sales price. You’ll also want to examine the cost metrics that buyers in your particular industry use to evaluate companies. Some companies will focus on profit, while others may place more emphasis on cash flow, book value or revenue. Knowing which metrics to focus on can help you increase cost of sales while making operational improvements.
Unfortunately, some business owners overlook the importance of branding when marketing their company. What happens when your company is typed into Google? Are there lawsuits or negative titles? Do the company logo, website and social media accounts represent the company’s best digital foot? What experience will the buyer have when they walk into the company’s office or store? These are all areas that a business owner needs to address when planning to sell the business.
See your business from the buyer’s perspective. While a valuation or business valuation report from a reputable accounting firm, brokerage or investment bank is a good starting point for building the case for the best valuation a business owner can get, a business owner who is a business sold, develop a convincing justification. for the selling price from both the strategic and the perspective of the financial buyers. Understand why a strategic buyer might want your business and try to gauge potential synergies. You will want to be able to explain the company’s long-term vision for growth, opportunities in the market and expected profitability.
Also understand that buyers have negotiation options to object. Buyers often prefer asset purchases to avoid excess liabilities and receive a tax basis equal to the purchase price, while sellers prefer asset sales to preserve capital gains and avoid cash double-heading. A higher cost basis through an asset purchase will generally allow for a lower tax liability down the road. The buyer will also want to know why you are selling, so you will need to develop and articulate a clear, coherent reason for proposing to sell your business.
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Identify and address any potential red flags such as high customer concentration or changes in service or legal rights. When doing due diligence for a buyer, be upfront about bones in the closet and potential problem areas. As you get closer to a sale, you’ll want to start building realistic and supportive long-term financial projections with your team.
Develop a buyers list. As you improve services to add value for the eventual sale, you’ll want to start developing a list of companies that will be willing to buy your company. These companies may want to buy the business to eliminate a competitor, achieve efficiencies, achieve synergies or for other strategic reasons. You will continue to develop and refine the world of buyers as you build your consulting team.
Build the team. In many cases, business owners have no experience in the process of selling a business and are negotiating with buyers with much more business experience, so the right business monetization team can have a huge impact on the success of the deal. Not hiring external consultants to avoid costs is always foolish, because the right team of consultants can help increase the sales price by giving the right advice, understanding your wishes and goals, developing the best strategy, and the best advocacy and contract negotiation for you.
A corporate CPA, investment banker, corporate attorney, trusts and estate attorney, and financial advisor all bring different skills and motivations to selling the company, so it’s best to choose each wisely. When it comes to the legal system, the in-house counsel can add a lot of value to the marketing process because he will have the knowledge of the organization, while the attorney and real estate attorney bring specialized skills. Having both on the team can be very helpful.
The Planning Corner
Another benefit of hiring an outside team of consultants is that business marketing planning can be time consuming, stressful and confusing. The last thing you want is a business function to mess up and compromise the deal, so it’s better to focus management on the business results instead of the deal.
Establish your potential and involvement. As the business owner trains a business marketing team, they can help the business owner understand the business, tax, legal, and financial implications of various marketing options. It is important to think through the full after-sales participation in the company for the owner. Will you be involved in management after the sale? How much control will you have?
