How to Sell a Business in Houston Texas – Advice from an Attorney
While owning and managing a successful business is a great achievement, it is at times necessary to sell the business to give you room to explore other ventures. The process of selling your business can be a bit complex, and it requires a keen and careful approach if you want to get the most suitable buyer. Are you are looking to sell your business? Here is some advice from RunRex on how to go about it:
1. Have A Valid Reason for Sale
One of the critical things that an interested buyer would want to know is the reason why you want to sell your company. Some valid reasons could be the fact that you want to retire, illness or just wanting to explore another venture. However, if your reason is that the business is not profitable enough or that you do not see it surviving, you will find it pretty hard to get a reasonable buyer.
2. Start Planning for The Sale Early
You should start the planning early by at least two years. The early planning is meant to give you room to shape the business and make it as appealing to potential buyers as possible. You get the chance to notify your clients, prepare the company employees for what is coming and do some housecleaning.
3. Valuate Your Business
Come up with a list of all the assets belonging to your business for valuation. Assets can include your primary clients, your furniture and equipment, staff, patented and copyrighted products and business finances. Assessment of your business will help you know the right price to sell your business. The process of business valuation is quite challenging and seeking the services of a financial consultant, and an attorney can help you determine the right value for your business.
4. Pre-Sale Value Enhancement
Even if the performance of the business is seemingly appealing, it is essential to take extra measures that will ensure that the company’s position in the market is strengthened. The strategies to be employed should be simple and can be implemented at least 12 months before the intended date of sale. The strategy should not be too complicated to affect the operations of the business. Instead, they should be aimed at improving the operation efficiency.
5. Market Research
Before approaching any possible buyers, conduct simple research in the Houston, Texas market to determine the price at which a company like yours would sell. It will help you know how to harmonize the value of your business and the price you suggest to your potential buyers. Also, have a look at the demand for the products or services that your business is offering. If the demand is promising, then the buyer interest will be high.
6. Get All the Business Documents in Order
For a smooth deal, make sure that all the business documents are in order. You should have your financial statements dating back up to four years, business tax returns, employee records, equipment receipts and any other relevant documents that your potential buyers may want to see. Have copies of the active contracts available and the assignments that the business may be undertaking. All these documents are meant to give the buyer an understanding of how the business is conducted.
7. Source for Potential Buyers
Once everything is in the order, you can now proceed to source for a buyer. Getting a buyer can be made easy by employing the services of a business broker; although they will have part of the money, you earn from the deal. Once you get several potential buyers, evaluate them carefully and narrow down to around two or three buyers who show great promise. Commence negotiations with them to ensure that they are invested in buying your business.
In as much as you will be aiming to get value for your money, provide enough room for negotiations by being flexible enough. An important rule to follow through the negotiation process that will be key to a successful transaction is to have all the agreements made put down on paper and signed by both parties in the presence of a witness. Also, have a timeline to ensure that you are not wasting time and, also, to know when negotiations are not leading anywhere.
8. Transaction
Once all the terms have been set and agreed upon, what follows is the transaction exchange. The exchange can take on various forms and not necessarily involve cash only. The terms of the transaction have to be specified too for effectiveness and efficiency.
While the ownership of the business will have changed, part of the selling process involves ensuring that the transition occurs smoothly. The transition process requires you sharing any information that the new owner needs to know that will enable them to run the business successfully without altering the operation of the company.
The selling process can take quite a long time, and it requires keenness and patience for a successful transaction.