Sell your company

Foreword

When an entrepreneur is no longer able or willing to run their business for various reasons, the idea of selling the company arises. In the current difficult economic conditions related to, for example, the global crisis caused by the Covid-19 pandemic, many business owners wonder what to do in such a situation and how to properly carry out the sales process.

Therefore, it is important to do it in such a way that the sale of the company does not turn out to be an even greater failure and a deepening of financial problems, but rather brings profit. However, before making such a decision to sell, the entrepreneur must prepare for it. Analyze the entire sales process step by step to do it consciously and wisely without losing money on the transaction.

FIRM SALE - STEP ONE

Analysis of the company, market needs, customer selection

In the first stage, the entrepreneur analyzes the needs of the sales project. Without a doubt, he will analyze the subject of the transaction, i.e. the company. He will have to estimate its value. This should not be too difficult when dealing with a small company. The entrepreneur will be able to estimate its value on his own. The situation will be different when the subject of the transaction is a large and complex business with huge assets and personnel resources. In the latter case, it is advisable to seek advice from specialists who deal with such valuations professionally.

Analyzing market needs is the next step for the entrepreneur. The price of the company to be sold will depend on this, as well as the nature and subject of the company's operations. Furthermore, if the company operates in a niche industry, it may happen that the number of potential buyers will be insignificant. Therefore, the position of the company on the market will significantly affect its value. The strengths and weaknesses of the business will also be significant starting points for estimating its market value.

A skilfully constructed offer to sell a company will undoubtedly attract the attention of many wealthy investors. Each of them will try to negotiate the best possible conditions for the purchase of the company being sold. So who will be the right client with whom we should negotiate? It will certainly be someone who has the power to make the final decision. Someone who has the funds to make the purchase. Someone we will trust, or at least try to trust, in the hope that our company will be in good hands or even, as the seller might hope, that it will grow and delight the new buyer with even greater profitability.

SELLING A COMPANY - STEP TWO

Offer revision (audit), transaction confidentiality

Before making a final decision, the buyer wants to analyze the company's situation, usually in the form of an audit. This is not surprising, as no one likes to buy a pig in a poke. As an owner, we as entrepreneurs must ensure the security of financial documentation. In particular, accounting, HR and payroll documents or contracts with suppliers or service recipients should be kept out of unauthorized access.

Once we have actually met with a potential buyer, we should make sure to sign appropriate documents to ensure confidentiality of data. After all, we will analyze the economic and financial scope of the company's operations. This will protect us from unfair competition and prevent data from being obtained. It is, in fact, our ideas or the strategy of action adopted in the company. The buyer undertakes not to disclose any information, data or documents made available to him as part of the company audit.

SELLING A COMPANY - STAGE THREE

Negotiations, contract preparation, sale

Negotiations are the most difficult part of the company sale process. The buyer will be interested in the lowest purchase price, and the seller in one that will allow them to cover all costs and bring a measurable profit from the transaction. The decision

to have the entire process conducted by a professionally trained negotiator who will use available negotiation techniques to achieve the most commercially and legally favorable outcome for us. At this stage, it is also possible to suspend the negotiations, in which case each party can calmly reflect on the course of the sales process.

The preparation of the contract is a key process. The scope and final signing of the contract will determine whether the sales process is satisfactory for both parties. The most important provisions must be included in the contract. These include the agreed sales price, the method of payment, and the security measures concerning the transfer of assets, etc. The scope of the seller's and buyer's responsibilities after the conclusion of the contract is also of considerable importance. The contract may also include additional provisions that will prove crucial for the future operations of the sold entity. This step also determines the content of other documents in which the seller may undertake to assist the buyer in implementing the contract or training a new manager to run the business.

The sale of a company is a complicated process that has very serious consequences for both the seller and the buyer. To ensure the process is successful, it is worth considering whether to entrust it to professionals. After all, they know the subject matter and will easily carry out the necessary steps, allowing us to feel at ease.

Categories: sell a company, business advertisements, looking for an investor

//M.K.

Illustrative photo

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