TOBIN TUTORIAL

How to get your business ready to sell

December 6, 2023
Justine Tobin

Selling a business can be a long process that, without wise guidance, can often be fraught with pitfalls and frustration. It can be exceptionally difficult to sell a business, unless you have enough foresight to:

1. identify and assign a group of trusted advisors,
2. plan the process,
3. anticipate where the problems usually arise and,
4. know exactly what you’re looking for from the sale.

Most people never sell a business, but there are firms that make it their business to help others buy and sell businesses. Those firms are investment banking companies like Tobin & Company.

We can help make the process easier, and the outcome advantageous to all parties.

Identify and Assign a Team of Trusted Advisors

An M&A project is best pursued with the support of a strong, knowledgeable team of advisors, especially if you’ve never sold a business before. You’ll need an investment banker to produce a current valuation, establish a reasonable starting-price, source your buyers and negotiate the deal. You’ll also need a CPA, a tax advisor, an M&A attorney, as well as a wealth manager and an estate attorney to identify how best to keep the proceeds of the sale growing and working for you in the transition to your post-transaction life.

A Most Important Preliminary Step: The Business Valuation

This task is best left to the investment banker on your advisory team. Investment banking firms like Tobin & Company deal with business valuations regularly. They have mastered the process and understand the landscape of your business marketplace. They also know the stability or volatility of the current market and economy and the best techniques for valuing businesses.

Thousands of factors that go into an accurate business valuation: current customers, liabilities, the financial position of the business, growth potential of the business, gross sales, intellectual property, net income, capital assets, human assets, and much more.

Valuing a business is not a task for the biased eyes of an in-house accountant. The only way you’ll get to a fair and precise valuation of your business is through the clear vision of an independent mind.

Another benefit of an expert resource conducting your business valuation is that the process will help you better understand your own business. The valuation process evaluates revenue sources, customer bases, relevant contracts and agreements, and other information that will reveal the detail, efficiency and thoroughness by which the business has been, and is, managed. This helps you as the seller to understand how others will perceive your business.

There is Science, Art and Luck in Finding Potential Buyers

Astute business owners, who have started and grown a business to respectable value, should never stop identifying prospective suitors. It never hurts to have knowledge and information about companies you might one day buy, or that might one day buy you! If you’ve filed such information in the back of your mind over the years, now is the time to discuss these prospective buyers with your investment banker.

There are many ways to find interested buyers, so if you don’t already have someone in mind, your investment banker will identify potential suitors through a number of channels:

1. identify and assign a group of trusted advisors,
2. plan the process,
3. anticipate where the problems usually arise and,
4. know exactly what you’re looking for from the sale.

Once potential buyers have been identified, it is critical to separate the tire-kickers from those who are sincerely interested and who have the financial resources to close the deal. There are companies, especially within the same industry, that flirt with acquisition targets to gather information or to try to steal-a-deal. Your investment banker can help weed these unscrupulous suitors out early. It is most important to have any suitor sign non-disclosure agreements to keep information confidential. Nothing can reduce the potential value of a business, like industry rumors can.

Closing the Deal

Once a mutual agreement on the terms of the sale is reached, a letter of intent (LOI) is signed by both parties. It has taken a lot of time and effort to get to this point, so now is no time to slow down.

The time between the signing of the LOI and closing of the final transaction can be fragile. As a seller, your goal should be the same as it always has been throughout the life of the business: to increase the value of the business or, at a minimum, retain the value on which the agreement is based. There will be plenty of time to relax and celebrate after the deal is closed.

Service for any Challenge

Most websites deploy “contact us” and then companies are disappointed when no one does.

Contact Tobin & Company and here’s what you get – we’ll listen. And we will give
you our opinion about whether our services might be a good fit for your needs.

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How to get your business ready to sell

Identify and Assign a Team of Trusted Advisors

A Most Important Preliminary Step: The Business Valuation

There is Science, Art and Luck in Finding Potential Buyers

Expectations vs. Negotiations

Closing the Deal

Service for any Challenge

Contact Us

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About

Services

Industries

Experience

Resources

How to get your business ready to sell

Identify and Assign a Team of Trusted Advisors

A Most Important Preliminary Step: The Business Valuation

There is Science, Art and Luck in Finding Potential Buyers

Expectations vs. Negotiations

Closing the Deal

Service for any Challenge

Contact Us

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Download Our In-Depth Guide on Due Diligence