Weekly Business Insights from Top Ten Business Magazines | Week 304 | Entrepreneurship | 2

Extractive summaries and key takeaways from the articles curated from TOP TEN BUSINESS MAGAZINES to promote informed business decision-making | Week 304 | July 7-13, 2023.

7 Preparation Essentials for Selling a Business

Even if you’re not ready to cash out of an enterprise just yet, there are a number of advantages in always being ready.

By Aadrew Gazdecki | Entrepreneur Magazine | July 11, 2023

Listen to the Extractive Summary of the Article

It might seem impossible, but your labor of love — that enterprise you built from the bedrock up and put your life’s blood into — could sell in as little as a few weeks. And that’s a potentially great thing — whether you’re fundraising for future projects or otherwise enjoying the financial return. The trick is preparing beforehand so that when ready, you can instantly answer every potential buyer’s questions and share every relevant data point.  There are seven vital considerations:

1. Reason for selling.  Your reason for selling can greatly influence a buyer. Enter negotiations with a clear and honest reason for selling, and buyers will take you seriously.
2. Timeline.  When a deal takes too long to close, it can run cold as more enthusiastic or prepared sellers tempt buyers away. But if you prepare an acquisition timeline and stick to it, it’s easier to keep them hooked until closing day.  What should a good timeline include? At a minimum, there should be dates and schedules for:  initial due diligence, buyer-seller calls, initial offers (letters of intent) and negotiations, final offers (asset purchase agreement), final due diligence, and closing.
3. Data room.  Think of all the information your business has accumulated including e.g, customer lists, vendor lists etc.   Much of it buyers will want to see before making an offer, but how do you share it efficiently?  The answer is with a data room — a virtual space for acquisition files.
4. Key selling points.  What makes your business special? Forget how you feel about it: Instead, ask what it will do for an acquirer. Consider, from the buyer’s perspective:  What you offer or do that no one else does? How easily and quickly your business will generate a return?  How does your business compare with others in the market?  
5. Last three years of metrics.  You wouldn’t back a horse unless you knew it could win. Likewise, a buyer won’t consider acquiring a business until they know how well it’s performed. The easiest way to present this data is by connecting your web, customer and traffic metrics e.g., to a startup acquisition marketplace.
6. Asset transfer plan.  Say your acquisition sails through to the closing stages in a few weeks. What happens then? Unless the buyer is acquiring stock exclusively, you’ll need to transfer some or all of its assets, and the easiest way to do that is with an asset transfer plan.
7. Asking price range.  Do you know how much your business is worth? Buyers aren’t shy about running those numbers, and you shouldn’t be either. Just don’t let any emotional connection creep into the valuation. What should impact it, and so ultimately the asking price, are your goals.  Think of an asking price as a range you can consider an offer.

3 key takeaways from the article

1. It might seem impossible, but your labor of love — that enterprise you built from the bedrock up and put your life’s blood into — could sell in as little as a few weeks. And that’s a potentially great thing — whether you’re fundraising for future projects or otherwise enjoying the financial return. 
2. The trick is preparing beforehand so that when ready, you can instantly answer every potential buyer’s questions and share every relevant data point.  
3. What should you gather, right now, to ensure you sell in the shortest time?  There are seven vital considerations: a reason for selling, a timeline for various stages of sale, accumulate information on your business (could be in a cloud), identify key selling points, should have the last three years of metrics, develop an asset transfer plan, and think about the range in which you could sell your business.

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Topics:  Entrepreneurship, Selling, Acquisition