Years of hard work can make the decision to sell your business a tough one. You get one chance to cash in on the hard work — the blood, tears, and sweat — you put into creating your Internet company and turning it into the success it is.
The process of selling your business is not a simple one. There’s a long list of things you need to do long before you list your company for sale.
Know what your business is worth
Your Internet company is your baby, obviously. Unless you know what it’s worth, don’t put a price tag on it.
On one hand, you’ll never sell your business if you think it’s worth several million dollars when it’s not. On the other hand, if you think a half a million dollars sounds like more money than you know what to do with, you might be tempted to sell without realizing that your business is worth double that.
Establishing your company’s value is the first thing you do before you list it. To do that, you must calculate the seller’s discretionary earnings, then compare the data you compute to that of other businesses of the same size and type.
Prep everything before you sell
Even if you replace all your computers, update your office location, and bring your books up to date, you still might not be prepared. If a potential buyer wants to see all the tax returns from your business for the past three years, you need them. If you cannot produce them immediately, you might lose the buyer.
You need at least three years’ worth of financial statements, profit-and-loss statements, tax returns, inventories, and property leases. Without this information, some buyers won’t give you a second look.
Advertise the sale of your business
Consider how you find most of the information you need: on the Internet. This means putting an ad in the paper or a “for sale” sign in the parking lot might not be the best way to advertise the sale of your business. Try listing it on the Internet. There are sites designed specifically for those who are selling Internet-based businesses.
Qualify interested parties
Don’t waste your time on buyers who can’t complete the purchase of your business. Make it a priority to speak only with interested parties who are prequalified to complete the purchase process. You have every right to ask to see a qualification letter from a bank or other financial institution, as well as a background check and other personal information.
Don’t provide too much information
Until you qualify your buyers and have them sign a confidentiality agreement, do not allow them to have any sensitive information, such as tax returns or profit-and-loss statements. You can provide basic information, such as the type of business, the start-up information and location, but not financial or confidential information.
Resources for selling your Internet business
Aside from learning what information you should disclose to potential buyers and finding the answers to the most common questions associated with the sale of Internet companies, you need to know what other resources to tap.
It is imperative that you enlist the help of your accountant and your attorney. They are qualified to offer expert advice when it comes to selling your firm.
This is a highly personal decision. Once you are certain it’s the right time for you, don’t be afraid to put yourself out there and list your company at a competitive price — and to negotiate offers to get what you want. It’s your company. If you are not happy with the terms of any offer, negotiate the terms.
If things don’t work out with one offer, hold out for others that could be waiting in the wings.
Originally posted on August 14, 2013 @ 8:27 am