It's always a buyer's market, so be vigilant and network when looking for a buyer so you can sell your business. Luckily, there are many ways to protect your interests.
- TIP: Consider that company insiders frequently lack cash, so you may be footing the bill or setting up third-party financing through a leveraged buy-out.
- Step 1: Ask the company's accountant and lawyer, who may have already had contact with potential buyers, who they might recommend. They are routinely privy to information about other firms in the industry.
- Step 2: Go the investment banking route, where certain specialty divisions may be working with buyers who are looking for opportunities. Let them do what they do best, and sell you.
- FACT: The Japanese temple construction company Kongo Gumi, in operation since the year 578, closed its doors in 2006 due to a troubled business environment.
- Step 3: Sell to insiders -- employees, relatives, friends -- who might pay more for your company because their inside knowledge lowers their risk.
- Step 4: Contact local business, community, and networking organizations to help get the word out. A trade association will also provide free advertising for you as a member.
- TIP: Search online for leads and ideas, but accept that no standard "Multi-Listing Service" for businesses exists, as is the case in the field of real estate.
- Step 5: Utilize trade and consumer publications, but don't forget to network with friends and contacts who may be interested or know someone who is.
- Step 6: Market your business without paying a fee by using a broker. When you go through a broker, the buyer is obliged to pay the fee.
- Step 7: Consider high-profile business buyers with interest in the area. A financial buyer with money to invest will look for cash flow. A strategic buyer will generally pay the most, based on long-range business plans to expand in the area.
- Step 8: Compose a selling memorandum with an executive summary detailing key elements of the business and the reason you're selling. Add an overview of the industry, as well as your assets and financial information, and projections of earnings.