Are you looking for a potential buyer to selloff your business? Just any buyer will not suffice your requirement. For the same, you need the most qualified buyer. Once you announce to sell your business, you will receive multiple offers from various buyers. However, finding the right buyer can be a painstaking process. Also, transferring the business and its ownership is a tedious process. How well you are prepared will define your success which depends upon your business worth.

As per the International Business Brokers Association, “A company’s value is determined by a compilation of factors such as sales, earnings, performance, market outlook, personnel, net book value, and the fair market replacement value of equivalent operating assets. Value is also influenced by intangible assets such as a company’s brand image, industry reputation, and goodwill”. So, you should work upon getting the maximum worth of your business. If you will quote too low, you will lose out. Similarly, if you will raise a red flag by quoting a too high price.

Many other factors that affect the selling of a business such as a manufacturing unit gets a higher return as compared to retail. Your business evaluation will be higher if you own important patents, copyrights, and niche products. Other factors include whether the business revenues are trending up, down, or flat.
To find the right price for your business, hire an intermediary with an excellent record of dealings and negotiating power. He will be responsible for determining the appropriate value of your business and find the perfect buyer. Here are a few guidelines to help you navigate through the murky waters.

Who are your potential buyers?

Anyone can be a prospective buyer of your business. People buy a business for various reasons. They are majorly divided into two categories- Strategic buyers and Financial buyers. Strategic buyers have a long-term vision of their business and check the strategic importance of buying your company. For example, your competitor can buy your business or any large business looking to enter the market with a new product or service. If your business meets its strategic goals, they don’t hesitate to pay a higher amount as compared to other buyers. On the other hand, the Financial buyers are usually investors looking to invest in your company. They are more focused on the stability and profitability of your company. All have different priorities. Some look for a stable company and others look for a weak company to turn them into a profitable venture. So, they will evaluate your company as per their requirements.

Where can you reach potential buyers?

If your potential buyer is a strategic buyer, check their past acquisition history and future commitment towards it. On the other hand, if your buyer is an investor, check out why this individual is interested in buying your business and how it will be a synergistic fit for them. Also, try toresearch about the buyer’s background whether they have ever been involved in a scandal or being arrested for any offense. Do check their charitable background and their successful track record. This will help you in reaching the right decision.

How to look good for potential buyers?

Before putting your business on sale, make it appealing enough to attract buyers. Get it in good shape, get your financial records straight, and your books in order. Since the buyers will also scrutinize and verify all the records before purchasing your business. It’s best to keep things ready. It will send out the right signal about you being ready and serious about selling your business. So, ensure you have the current and last three year’s profit and loss statements, ITRs, and balance sheets handy before reaching out to the buyers.

Create Projections for future earnings

List your assets and create the projections for future earnings. We recommend building a selling memorandum including key elements of your business, a list of products and services, industry overview, achievements, future projects, and the reasons for putting the business on sale. The first impression sends out a positive signal so get the physical business assets such as office, manufacturing unit, etc. cleaned up and ready for visitors. Make it presentable. Dispose ofunwanted and unproductive assets.

What to expect out of the deal?

Usually, if a buyer has made up his mind to buy your business, he would like to buy everything under the roof. Take basic yet important decisions before signing off the deals. These may include the ones mentioned below:
• Do you wish to keep any assets?
• Will the new buyer replace all the staff?
• Do you want to sell it off completely or maintain a minority stake?
• Remove assets from your personal property before the deal is signed off.
• Do you want to offer seller financing?
• Will the buy change the business name or retain it?
• Who will own the patents and copyrights?

Way to Reach the Right Buyer

Various avenues can help you in reaching out to the potential buyers. All you need is to cast a wider net to reach the right buyer who is ready to pay the right price for your business. Use outlets such as newspaper advertising and trade publications or place it on BizQuest.com and BizBuySell.com. You can also approach a broker, investor, or an M&A advisor to help you in reaching the potential buyers confidentially. Be careful while putting your business on sale as any negative connotation may ruin a good business deal.

Why should you qualify potential buyers?

Try to find the reasons why a certain buyer wants to purchase your business. Sign a confidentiality agreement, do a background check, and ask for standard financial documents. The broker or investor hired on your behalf can carry out these activities for you. This information can help you in reviewing the buyer’s financial status, sources of financing, and other key background information such as bankruptcy and judgments. You would like to sell your business to someone who has strong management experience and financial background to take your business to the next level.