Follow these recommendations to sell a company
Selling a company is an important decision and it can become a complex situation that requires time. Although the sale of each company is carried out in a specific way depending on the type of company, the fundamentals that are used are the same for all of them and there are well-established steps that can be followed to find the right deal when selling a business. a company.
Ideally, you should prepare the business for sale a year or two in advance before the actual sale occurs. This will allow you to put things in order and get the highest possible price. Selling a business for maximum value will depend on a number of factors, including whether business sales agents were used, the timing of the sale, and why you are selling it.
What steps to follow to sell a company?
In order to sell a business, it is important that a series of steps be followed, which are essential for a sale to be made intelligently and that it can have an excellent result for both the buyer and the seller.
For this, the following steps will be followed:
1. Make the decision to sell a company
2. Thoroughly review the structure of the company
At this point, a determination of the value of the business must be made that is realistic and that allows a good agreement to exist by both parties on the value of the company.
The review of the company's structure also allows advice to improve the growth and performance of the company, through a series of actions that increase its value prior to sale.
3. That it be carried out through Due Diligence which allows a transaction to be structured correctly, contracts drawn up and then follow-up on the investment.
4. Search for a buyer and carry out an analysis of the offers that arise.
Here the financial history of the company will also be evaluated with the purpose of analyzing the benefits that may be had in the future.
It will also be important that a negotiation of everything that the company includes is carried out since this can consider aspects such as: shares, assets, liabilities, employment contracts and capital properties.
5. Contract signing and closing when selling a company.
What is Due Diligence and how does it help when selling a company?
A Due Diligence process consists of a group of specialist consultants carrying out an investigation or audit within the company, which makes it possible to determine if the company is in good condition and if it is complying with all its obligations, which is why it analyzes aspects such as the area of activity of the company, the possibilities and perspectives that exist in the future of the business and the state of assets and liabilities.
To carry out the due diligence process, two types of analysis can be carried out, which can be the following:
- Economic financial analysis: This is carried out through the review of a purchase that must be rigorous and detailed, which has an impact on the financial statements and also on the valuation of tangible and intangible assets.
- Legal analysis: This analysis allows for the thorough review and study of the contracts the company has; The analysis of tax and labor information is also carried out.
What is the methodology followed by due diligence?
- The first step within due diligence It is to analyze the financial and operational part of the company, so a review of the financial processes, transactions, company management and the way in which the procedures are applied is carried out.
- The second part in the structuring process in which aspects of the company are reviewed that allow the design of a series of procedures that allow a transaction that is optimal and risks are minimized.
- In advising the company, proposals are made in the purchase and sale and the options for entering and exiting the market are reviewed, in addition to carrying out a risk analysis.
- When considering the strategic solutions that can help the company, an evaluation is carried out that allows increasing the economic value, in addition to analyzing the cost of capital and the impact that exists in the structural part of the financing, this also allows evaluating the projects and that there have been advice.
- The penultimate part of the process consists of a real estate due diligence that seeks to review the operations that are involved in the sale or purchase of those assets that are real estate.
- The last step is the management and valuation of the assets that are in the company for what is considered the useful life of the assets, the reconciliations, among other aspects.
How to sell a company intelligently?
Before selling a company, it is important to understand that the sale is part of a process, so it must be carefully planned in order to be successful, so it is recommended that you hire the help of a professional.
- Understand the reasons for the sale
It is important to understand why a business is being sold and understand everything the company stands for, as this will provide a sense of reassurance and any questions buyers may have can be answered.
- Identify business value
In order to establish a good price at the time of making the sale, it is important to understand its total value and everything that the company represents, for this reason you should consider talking with an appraiser who can consider all the necessary aspects to determine the value and that there are no losses from the sale and that it is made at a fair price.
- Identify good buyers
A certain time must be dedicated to find the person or economic entity that is perfect to take over the company, so 2 to 3 buyers who are qualified both financially and strategically must be considered.
A good opening should also be considered in case there are negotiations on the price of the company, since this will help to have better decision making.
- Get legal advice and a specialist
In order to find out what is needed to properly sell the company, it is important that you consider legal advice and consult with a specialist who knows about the sale of companies or knows about issues related to the business field.
- Develop a strategy to exit the business
Experts advise that entrepreneurs plan their exit a year or two in advance. Being prepared will also help you put things in order, including improving your sales, financial records, and customer base, which will make your business more attractive to potential buyers and make it easier to sell a business.
- Make a diversification of clients
Having a broad client portfolio will help you have different sources of income, so it is important that you have both large and small clients that can represent that the company has constant growth and that each of the clients does not represent more than the 20% that is in sales.
- Make a contract
Hiring a professional who knows the legal field is important to be able to receive advice and to be able to make movements that favor the company, so the contract will lay the foundations for the sale and the conditions on which it is carried out.
What are the reasons why a company can be sold?
At present there are several reasons and situations for which a company can be put up for sale; These can be personal or economic reasons and in both cases an analysis must be carried out that allows a company to be sold properly.
- Conflicts between partners
- Greater capital injection
- Find a company with international impact
- That the profitability is decreasing
- That there are no successors to take over the company
- Search for strategic changes
- new competitors
Contact us in ANEPSA If you are in the process of selling or buying a company, we can help you.