Do you know how much your business is worth? The process of selling your business can take several years of preparation and planning. Getting a proactive valuation enables you to determine how much your business is actually worth, which helps you develop a strategy to increase its value before you sell.
We asked Itamar Chalif, VP, Business Banking Officer at Rockland Trust, for tips on what to think about when owners want to sell their business. Here’s what he said:
Thinking strategically about selling your business eliminates any last-minute scrambling and ensures that your business is in a good position for a sale. For example, does the business have a line of credit? Not having one doesn’t mean a red flag as some businesses will self-fund. However, in some instances, having a line of credit can mean that a company may be in a position to take on bigger projects or hire staff that would normally exceed everyday cash flow. Basically, the company has the potential to expand or react to changes if needed.
If you’re planning to retire after selling your business, it’s important to consider if it is financially feasible. Similarly, you may want to continue working at the company for a period of time after the sale to help with the transition process. This is something that the new owner will need to agree to as part of the sale. If this is the case, be sure to develop an exit plan for your last official day. You may also want to continue working at a different company or in a different industry.
Your family lawyer is a great and trusted resource for your will and similar matters, but when it comes to buying or selling a business, you want to hire a merger and acquisitions lawyer. Similarly, you should consult a certified public accountant with experience in buying or selling businesses to help you plan and prepare.
Itamar cautions against the enticing offers that may come along where selling your building can yield great short-term gains. When you think about selling your business, that’s one less asset you’d have at the bargaining table.
You may regret selling your building for that great offer a few years down the road because potential buyers may be apprehensive about buying your business because they could be asked to leave when your current lease ends and location is key to profitability in certain industries. Always be sure to consider long-term impacts before selling any real estate assets.
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