Are you planning to sell your business in the not-too-distant future? If so, you will no doubt be keen to ensure you achieve a fair selling price and don’t run into any major issues along the way.

There are, of course, seldom any guarantees with mergers and acquisitions. However, you might be able to help the selling process run a little smoother by taking these steps before putting your company on the market:

Assemble a Team of Professionals

It is rarely advisable to attempt to sell a business on your own. If you want to avoid running into problems, you will need to hire a team of experienced professionals to help you.

Depending on the nature of your business and your personal circumstances, you may require:

  • A financial advisor
  • A certified public accountant (CPA)
  • A California business lawyer
  • A business broker, and
  • A business valuation expert

It is generally best to work with professionals who have worked on the sale of companies in your industry before. Their experience is likely to prove invaluable as you work through the selling process.

Determine the Fair Market Value of Your Business

Before you put your company on the market, you’ll need to determine its fair market value. This figure will help you decide on an asking price.

There are many ways to value a business, including:

  • Liquidation Valuation: The amount of money the business would have if it sold all its assets and paid off all its liabilities today.
  • Book Valuation: The value of the shareholders’ equity as shown on the balance sheet.
  • Times Revenue Valuation: The company’s revenue is multiplied by an industry-specific multiplier.

Your accountant and valuation expert should be able to help you decide on the best valuation methods for your business.

Ensure Your Financials Are in Order

Before anybody buys your company, they’ll want to take a look at your financial records. They are likely to be particularly interested in your profit and loss statements, balance sheet, and payroll reports.

If your records are unclear or littered with obvious mistakes, prospective buyers may choose to walk away from the deal. For this reason, it is always a good idea to sit down with your accountant and clean up your financials before you put your business on the market.

Draft a Letter of Intent

During the early stages of the selling process, both you and the buyer will most likely need to sign a letter of intent. This letter outlines the details of your deal and each party’s obligations.

It’s possible to have the buyer draft this letter of intent. However, if you choose to do so, you allow them to decide how specific it will be and what matters will be addressed in it.

If you want to be in control of the deal, have your attorney draft the letter of intent before you solicit offers.

Your Experienced California Business Lawyer

Do you need a knowledgeable business attorney in San Diego to guide you through the selling process? If so, please don’t hesitate to contact the Semanchik Law Group. We’ve been representing local business owners for years, and we would love to add your name to our long list of satisfied clients.

To set up a consultation, all you need to do is give us a call at (619) 535-1811 or contact us online.