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Selling your business can be a very stressful experience but it doesn’t have to be. We at Cultivate Wealth Management have experience from both sides of the equation and can help guide you through the process, coordinate the necessary professionals and help you execute the plan.
The first step in the process is to ensure that your financials are in order. This will also include, on average, three years of tax returns and financial statements. Keeping Year-To-Date financials are just as important as potential buyers want to know that they are purchasing a company that is fiscally sound and up to date. As any buyer will tell you, detailed and accurate financial statements are the basis for formulating fair value of a purchase.
Engage with a Business Valuation Expert. Third-party experts will help you ascertain a more precise figure of what your business is worth and should help you determine expectations on fair market value. Some industries can plan on receiving three to six times cash flow while others will average more and some less.
It is never too early to plan your exit. As a successful entrepreneur, offers can be presented at any time. Being unprepared can lead to longer delays that can adversely affect the final outcome. Additionally, knowing what deal structures would be acceptable to you will enable you to make better decisions beforehand.
Although the aforementioned steps are necessary in the sale process, selling to partners and family members can include additional challenges. Working with experienced professionals to develop a cohesive strategy can aid in eliminating the emotions involved in these types of transactions.
There are two general ways to consider the sale of your business: A “Stock Sale” where company stock is sold by the shareholders or an “Asset Sale” where the assets of the company are sold by the entity itself. Before deciding on which structure to implement, it is important to understand and evaluate the consequences of each. In some cases, a hybrid sale is most appropriate. Coordinating with your CPA’s and Attorney’s can help you make the best decision for you.
Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual.