(Last Updated On: November 7, 2023)

So, you have found yourself in the enviable position of being able to sell your pride and joy after years of building it, nurturing it, and making a living form over the years. That’s great! But the next question that ultimately arises is how to get the very best deal that all parties involved are happy with in order to close the deal and walk away with your just rewards. While it might appear an easy task at the outset, there is far more that goes into it than simply coming up with a number and offering it up to a potential buyer. This post will explore some top strategies to help you settle on a number conducive to your plans.

Enlist The Help Of A Dedicated Broker

Selling a business isn’t akin to any other form of sale. It is typically a highly sophisticated procedure that includes numerous moving parts and the ability to find those actively seeking a new business venture and who have the cash to back it up. This is where dedicated brokers come in and can utilize their often extensive networks to land you in front of the right people who are able and willing to put their money where their mouth is. As per this advice from HedgeStone, having this kind of network can place your business front and center of both domestic and possibly even international buyers. Moreover, aside from their networks, they will have a vast array of knowledge in this procedure that can assist you from coming up with an initial number to collating all pertinent documentation, and eventually to the negotiation stage where they will be fighting in your corner to secure the best result possible.

Determine A Desired Sale Price As A Starting Point

As stated previously, selling a company is a bit trickier than you think. This extends to coming up with a price you are happy with that is suitable to your needs, gives enough wiggle room for negotiation, and isn’t off-putting to potential suitors. A professionally appraised market value provides an objective baseline, accounting for comparable industry transactions and financial metrics. However, it’s worth noting that subjective factors can also influence negotiations. Projecting future growth potential allows weighing interest from strategic versus financial buyers. Growth companies often demand premiums, while stable operations attract buyers valuing steady cash flows. In almost all situations, establishing a realistic yet optimistic asking price will be most conducive to facilitating offers from a broad range of buyers. Conversely, overly ambitious targets may dissuade serious bids, while low valuations will leave money on the table and you out of pocket.

Prepare Financial Documents And Projections

Audited financial statements spanning multiple years provide buyers with verifiable data on profitability trends, balance sheet strength, and cash flow history to underwrite operational viability. Prospective acquirers expect detailed income statements, balance sheets, and cash flow statements segmented by department to scrutinize individual business units. Moreover, you will need to ensure you include as many details regarding suppliers and existing customer contracts along with those in process, all of which will lend credibility to your business and put you in a better position to remain steadfast on your price. 

Understand Buyer’s Needs And Motivations

For any business owner seeking optimal terms upon transferring ownership, thoughtfully discerning the strategic imperatives and objectives of prospective buyers is paramount prior to official negotiations. Qualifying interest and determining suitability requires comprehending a buyer’s core motivations, whether they be strategic expansion, a desire to acquire any technology you have developed, or plain old-fashioned investment returns. When you understand these issues, you can better position yourself to discuss why they need to purchase your business and at the price you are offering. For example, if their prime motivations are to acquire proprietary technology, your negotiation tactics should involve discussing the effort that has gone into its development and how the buyer will achieve a return once they integrate it into their existing operations. 

Use Data To Support Negotiations

It doesn’t matter if you are a metal fabrication business or have developed the next Facebook; you will need data to back up any price you demand. Leveraging data to showcase growth opportunities, such as geographic expansion or new product development, justifies premium valuations to strategic acquirers. Additionally, presenting historical performance metrics alongside conservative projections will foster a level of transparency that puts all stakeholders at ease and that you have put clarity at the forefront of negotiations. This tends to promote trust and ultimately can smooth and expedite the process.

There are lots of factors that go into a successful business sale, and negotiations are one of them. As long as you have a compelling business to offer and are able to present all the facts, you should be in a great position to get the price you so desire.