So you’ve decided to sell your business – now what? In our latest blog series, we explore the general framework involved when selling a business.
We all know that getting rid of long-term assets can be hard. One of the hardest assets to part with is often a business. For many business owners, this process is complicated and emotional, given their personal attachment to the business they have built, often over a number of years.
Once the hard decision has been made to sell a business, the first question for most people is “where do I start”?
In a general context, we will explore the selling process in a series of 12 steps/stages:
Determine a valuation range for the company
Assemble your “sell” team, both internally (e.g. management) and externally (e.g. professional advisors)
Accumulate all necessary information and data items that a buyer will want to see
Build the marketing information decks and presentation materials using the information and data collected (in step 3)
Research potential purchasers and prepare a preliminary list of people to “talk to”
Qualify this preliminary list and narrow down the list to a select number of potential purchasers
Using the marketing information decks and memorandums, prepare necessary disclosure documents, including legal confidentiality and non-disclosure items for distribution to these potential purchasers
Provide the potential purchasers the information decks and memorandums once the signed confidentiality and non-disclosure documents have been received
Follow up with the most promising parties and begin discussions about the transaction structure and price (e.g. the negotiation process)
During the negotiation process, or near the end when both parties have come to a mutual consensus, begin collecting from the buyer(s) the necessary documents (e.g. indication of interest (IOI), letter of intent (LOI)
Select the best offer and negotiate a binding purchase agreement
Close the deal with the purchase agreement outlining the terms of the sale, signed by both parties
Now that we have outlined the general steps involved in selling a business, stay tuned for next week where we begin exploring the initial steps in a sale transaction.