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Tips for Selling a Business

Selling a business in Los Angeles is a challenging task for most people and especially for first-time sellers. First Choice Business Brokers offers these tips to help organize the sales process.

Your Sales Team - Finding the Right People

Develop a team who stays with you throughout the sales process to tackle different procedures. A complete team will include professionals assisting with documentation and legal transactions in their areas of specialty;

● A business advisor to be the intermediary objective third party
● Lawyer to complete legal transactions
● Certified Accountant to audit and organize financial metrics
● Real Estate Broker to deal with owned or leased properties

Creating a Sales Strategy

Devise a plan to sell your business efficiently and effectively.
● Identify your business' key strengths and weaknesses.
● Focus on creating a unique selling proposition
● Differentiate roles on your sales team.
● Define your ideal customer profile.
● Understand what it takes to attract your target customer.
● Provide a consultant and advisor to your prospects.

Your First Choice Business Broker has a robust strategic plan for a successful sales process and closing that will exceed your expectations.

Calculating Business Valuation

The business valuation document is central to the sale of your business. It is a comprehensive document that determines market value backed by verifiable metrics. This portfolio includes; financial documentation, customer base metrics, descriptions of services or products provided, and lists of physical assets, branding, and reputation.

Organizing Your Financial Records

Financials play a considerable part when selling your business. You must ensure that all your financial documents are audited and verified before you sell your business. A poorly organized bank statement can set your sale back for a long time. Check your tax records and employee payrolls, which are usually overlooked during most business sales.

Drafting Confidentiality Agreements

Confidentiality must be maintained throughout the process when you're putting your business on sale. Customers, suppliers, employees, and other stakeholders may destabilize when rumors of the sale get around. Having a place away from the company to field phone calls and initial meetings with buyers effectively prevents premature information from being leaked around the office. A non-disclosure agreement is signed before proprietary information is shared with a prospective buyer.

Verifying Asset Condition and Value

A more detailed part of the valuation process is verifying your assets' condition. It's a good idea to research what value other businesses assign to their assets, including anything from warehouses, goods, computer peripherals, or stock. A business broker can help you develop an accurate asset valuation for your business.

Creating Exposure to Networks of Buyers

First Choice Business Brokers have extensive networks of buyers looking for a business like yours. FCBB will focus on creating an effective campaign to maximize your business exposure to these networks. The drive will appeal to the right audience, convey core company values, and build trust for buyers.

Organizing and Qualifying Leads

Leads are the lifeblood of any sale campaign for a business. Getting the right people interested during the sale is the best way to minimize time on the market. Qualified leads can increase the chances of a quick sale. Organizing leads into various categories so you spend time qualifying the most suitable leads will save you time. Being as detailed as possible here will help you disqualify buyers who do not meet your criteria.

Setting up Meetings

Meeting potential buyers and qualified leads can take a lot of time, but it is vital to selling your business. It can give both parties insights into each other's business objectives. During meetings, it pays to be clear about your goals and requirements during the sale. Both parties must be transparent about what they want from the sale. It pays to have a third party overseeing the meetings, like a business broker.

Negotiating the Right Price

The seller sets the sale price and terms with a business valuation. The buyer argues these points during negotiations—the more transparent and accurate the valuation, the less opportunity for argument. Consider the awkward and sometimes emotional subject, and realize that both buyer and seller will appreciate an objective intermediary to carry out the negotiations. A professional business broker with years of experience can be the perfect negotiator.

Carrying Out Due Diligence

Understand the buyer's goals for your business. Due diligence is mandatory for both the seller and the buyer.

As a seller, you want to qualify the buyer early in the process.

● Can they show competence?
● Do they have an existing growth model?
● Do they have the finances to buy?
● Will they retain existing employees?

Finding the answers to these questions will help to qualify the buyer.

During the buyer phase of due diligence, they look for transparency and verifiable metrics in the valuation. A buyer may ask for additional information. The seller should be well prepared by anticipating what the buyer will want ahead of time. 

Verifying Documents from Both Parties

Verifying the buyer's and your business's documents will protect both parties from future legal issues. It allows both parties to identify and resolve errors or liabilities.

Closing the Sale

The final step of the sale is to complete all legal transactions. Then follow through with any stipulated period of transition. A standard changeover is 1-3 months, but it may be as long as both parties decide.

Your First Choice Business Broker provides you with a professional advisor who stays with you for the entire sales process. Your advisor protects your best interests from the initial consultation through valuation, negotiations, and a successful transition.