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Tips to maximize the profit from selling your small business

On Behalf of | Oct 20, 2022 | Business Law |

Connecticut entrepreneurs rightfully take pride in building small businesses, but a variety of reasons could prompt you to sell your company. Hopefully, the decision will not be made in haste. A good exit strategy can take two or three years to put together but could yield the best profit. You may have up to 80% of your net worth wrapped up in your business assets. With the right preparation, you can increase the odds of getting the price that you deserve for your hard work.

Sell when sales are strong

In the years leading up to listing your business for sale, you should make its financial situation look excellent. Accomplish this by:

  • Improving sales by 30% annually
  • Expanding your customer base
  • Installing good management

If you can achieve these things, potential buyers will see a growing business that is not reliant on a handful of customers and has future growth potential.

Prepare to disclose business records

Prospective buyers will want to dig into financial statements for previous years and investigate your business contracts. They will need to review revenue, expenses and how contracts are structured. Buyers will want to know if your current contracts are transferrable or will need to be renegotiated upon the sale of the business.

Consider hiring a valuation specialist

Putting a dollar figure on your business requires an in-depth analysis of many variables, including:

  • Inventory
  • Sales
  • Equipment
  • Real estate
  • Intellectual property
  • Location
  • Reputation

A report from a third-party valuation specialist adds credibility to your asking price.

Business brokers are useful

A broker could be worth the cost. Brokers can help to connect you with buyers and maintain confidentiality as other parties inspect your financials.