Naperville Business Law Attorney Discusses Tips for Selling a Business
Being a small business owner can be an exciting and fulfilling career, but not everyone chooses to keep the same business for years and years. If you have decided to sell your business, you may have already realized that it can be quite the undertaking. Selling a small business can be a complex and time-consuming process. As a small business owner myself, I realize that there is no perfect way to go about it, but experts do encourage would-be sellers to consider the following strategies.
Start Preparing Earlier Than You Think You Need To
Most business sales take between six months to two years to complete. Selling a business is not a decision which one can make suddenly and expect to be successful. Before you start looking for potential buyers, make sure you have your financial records in order. It may be helpful to gather your tax returns, profit and loss statements, leases, and bank statements from the last few years and review these with an accountant. A potential buyer will want to know the particulars of how your business runs and what your expenses are. It may also be helpful to create a list of all the equipment that is being included in the sale, an updated operating manual, and a list of important contacts.
Protect Sensitive Information Via a Nondisclosure Agreement
Before you give out sensitive financial information about your business to potential buyers, find out if they prequalify for financing. It is very likely that individuals will contact you about buying the business who do not actually have the ability or intent to follow through with the sale. It is important to thoroughly vet potential buyers. Additionally, you may wish to have potential buyers sign a nondisclosure agreement (NDA) which prevents them from misusing confidential company information they will have access to. An NDA also helps prevent third parties from learning about the potential sale before you are ready to disclose this information.
Avoid Undervaluing or Overvaluing Your Business
One common mistake business owners make when they are selling their business is not accurately valuing their company. With the help of your attorney, you may consider enlisting the services of an accountant to conduct a formal business valuation. You will need to be able to defend your price to potential buyers with concrete evidence. Income statements, balance sheets, cash flow statements, and other records will almost certainly be helpful during the negotiation part of the selling process.
Contact a DuPage County Business Law Attorney
In addition to my over 30 years of business law experience, I am also a Certified Public Accountant (CPA) who is equipped to assist with business valuations. For help with selling a business from an experienced Naperville business law attorney, contact the Gierach Law Firm. Schedule a confidential consultation to discuss your business goals today. Call us at 630-756-1160.