When selling your business, there are two main goals: (1) To get your business sold, and (2) to maximize the sale price of your business.
Finding potential buyers and advertising your business for sale is the first step. Once you find an interested buyer or buyers, the task is to mutually agree on a price that benefits both you, the seller, as well as the buyer.
Below are two ways to maximize the sale price of your business.
Finding The Right Buyers
In order to maximize your sale price, the first step is to find the right kind of buyers. What is the right kind of buyer? The right buyer is the one who has the highest willingness to pay to purchase your business.
The way to find the best, highest-willing buyers is to implement a comprehensive marketing campaign that reaches as many potential buyers as possible.
Business brokers specialise in implementing marketing campaigns to find buyers for a business. Once your broker lists your business for sale and commences the marketing campaign, the next step is to communicate with and find potential buyers.
After finding potential buyers and communicating with them, the next step is to negotiate a price that you can both agree on, while achieving the maximum sale price.
Complete Documentation & Financial Records
The risk involved in buying a business is quite high. In order to mitigate risk, buyers want to find out as much information about the business as possible.
The less risky a business opportunity is to the buyer, the higher they are willing to pay for the business. And the main way to show the lower level of risk of purchasing a particular business is to give the potential buyer as much information about the business as possible.
The more information you provide a potential buyer, the more comfortable they will be with their decision. It will lessen the risk in so far as they buyer will know what they are walking in to.
Buyers want to see important and informative financial and legal records, such as tax returns, financial statements, licenses and relevant contracts.
By providing these key documents (after the buyer signs a confidentiality agreement, of course), you as the seller will help ease the buyer’s mind. You’ll help the buyer understand what it is that they are potentially entering in to.
Conclusion
So, implementing an effective marketing campaign to find buyers, and providing buyers with as much information as possible so as to make an informed decision are two main ways to maximize your sale price.
In addition to this, it’s important to remember that, ultimately, it is the buyer who dictates the sale price of a business.
If you price your business too high, or fail to come to an agreed sale price with the potential buyer, you may lose out on the sale entirely.
While you might have an ideal sale price in mind, it is useless to stick to that price if no buyer is willing to pay that price for the business. Consequently, maximizing your sale price entails acknowledge what is the maximum price the market is willing to pay.
