Selling your business is rarely a simple process. It requires planning, support, and a little luck. But with the right strategy, you can successfully navigate the sale and get as much compensation as possible. Here’s how the process works, step by step:
- Determine how much your business is worth. A valuation from an outside expert is critical here, and can help you identify ways to grow value before the sale.
- Take your business to market. This should ideally begin with hiring an advisory team to help you manage the sale.
- Prepare a confidential information memorandum. This is a marketing document that gives an overview of your company to potential buyers who have been vetted and signed a nondisclosure agreement.
- Review the buyer’s offer. You may need to send a counter-offer.
- If you accept the offer, due diligence commences. This is a key part of the sale, because buyers want to know exactly what it is they are getting. You will need expert help to ensure you can promptly respond to due diligence requests, because a prompt response lends professional credibility to the process and can ensure a prompt closing.
- SBA financing: The pre-approval process for SBA loans usually begins during due diligence. Your M&A advisor can also pre-screen buyers. By the time they are actually seeking financing, the application should be a mere formality.
- Escrow and closing: After the completion of due diligence, escrow opens. The escrow officer prepares escrow documents, which both parties review and sign. Then you’ll prepare closing documents.
- Transition and training: After escrow closes, the transition period begins. Lasting a minimum of 4 to 6 weeks, there is usually no cost to the buyer associated with the initial training. If the buyer requires additional training, you may negotiate a paid consulting agreement.
