How to Successfully Sell a Business: The 5 Phases

Selling a business is difficult today.  This post outlines a strategy that involves five distinct phasessteps}.  

Getting it done up front

The more you accomplish before your place your business on the market, the better chance you’ll stand of selling a business.

The First Phase

In the initial meeting, your California business broker and you will discuss things like your your employees, your market, and your financial history. His goal is to understand your strengths and weaknesses, as well as how your business will or won’t sell in today’s market.

You should get an honest assessment of your chances of selling your business, and whether or not you should go back to add value to your business before starting.

The Second Phase

Step 2 is where effective California business brokers doe a tremendous amount of research about your business and industry.  He’ll look at your financial records, and look at comparables in your area. The goal is to assess your business, and how well it will sell in the market. Then, you’ll receive a small list of things you can do to increase the value of your business.

In this phase, you’ll determine when will be the right time to sell a business.

The Third Step

First: Sign the agreement

I hope that you hadn’t signed an official agreement with your broker before this phase.  Now is when you’ll actually sign on the dotted line with your business broker to get rolling on the sale.  

Second: Build your marketing machine

Now, you and your broker will Build your marketing machine.

Your marketing materials is going to be a huge “book” that’s up to 50 pages or more, and contains everything necessary to sell a business.

You’ll include things like info about your plant, equipment, contracts and leases.

You’ll also list information about growth oppotunities, concerns, issues, and industry trends.

Third: Actively Market your business.

You’ll connect with all potential buyers who you think may be interested in your business. You do want to ensure that they are qualified buyers, so that you’re not having to deal with inquiries from many unqualified buyers.

They’ll get a “blind summary” that gives them all the data they’ll need to make a go/no go decision, and whether or not they want to continue with the sales process.

Fourth: Refine the buyers list

Next, narrow your list of potential buyers, based on their ability to buy and their interest in buying.

Fifth: Meet with potential buyers

You’ll have a meeting with qualified buyers, often in person, or possibly by phone. They’ll grill you for information about your business and decide if they want to submit a formal proprosal.

Sixth: Create a auction for your business

Get all qualified and vetted buyers to submit a bid at the same time.  This guarantees that you’ll have several qualified bids from which to choose.

The Fourth Phase: Due Diligence

The due diligence phase is where the buyers get to tear your business apart. They’ll look at every last line item of your financials, and every aspect of your business.  

They’re actually looking for problems, which, if they’re interested in your business, provides them with better reasons to reduce their bid price for your business. That’s why you should do so much up front.

The 5th Phase of Selling a Business: The Close

Finally… At the same time as the previous phase, you’ll be preparing all the paperwork, conducting your final negotiations, and getting everything prepared to sign the papers and sell your business.