Once you have a buyer in the pipeline, the negotiation is on. You've worked hard to build your business and want to reach a satisfactory deal. Negotiating the sale requires preparation and flexibility.
Understanding the buyer's perspective
While you want to get top dollar for your business, it's helpful to understand the buyer's perspective. Understanding what your buyer is looking for in a business is key to marketing your business and negotiating a better deal. Highlighting aspects of your business that meet the buyer's expectations and needs can help justify your asking price and even increase your business's potential value.
Proactively address buyer concerns to get ahead of any potential roadblocks. Your buyer may raise various concerns as a result of their due diligence or audit.
By understanding your buyer and their bottom line, you can prepare to address any concern with a successful rebuttal. Put yourself in the buyer's shoes and consider what factors would be most important to you if you were buying the business.
Preparing for negotiations
Preparation is key to reaching a favorable outcome. The better you prepare for the negotiation, the higher your chances are of receiving the asking price or better. Here are a few ways to prepare for the negotiation:
- Define your goals: Set clear objectives and priorities so you know when to hold your ground and when to be more flexible.
- Set realistic expectations: Small businesses and larger companies alike need to set realistic expectations for the negotiation process.
- Build rapport: Establish a professional relationship with the buyer and practice active listening.
- Prepare your arguments: Develop well-reasoned arguments to support your position and anticipate potential objections.
- Determine your walk-away point: Set the minimum acceptable outcome so you know when to walk away.
- Be open to collaboration: Explore win-win solutions to achieve successful and long-lasting agreements.
- Review legal and regulatory requirements: Ensure everything is above board by working with a business broker and abiding by all applicable laws.
Closing the deal
The final stage of your business sale is closing the deal. Selling a business can be a straightforward process if you are thoroughly prepared and take all legal considerations into account.
Finalizing legal documentation
After reaching a fruitful sales agreement, you're ready to finalize the legal documentation. Working with a professional business broker and legal counsel will ensure your documentation is up to standard and legally binding. Your legal counsel can help prepare the sale agreement which will include detailed terms and conditions.
Involve legal professionals in every step of closing the deal to ensure all legal requirements of the sale are addressed. This includes due diligence, regulatory approvals, tax considerations, transfer of assets, notice to creditors, and more.
Handling due diligence and inspections
Close the deal faster by ensuring a smooth due diligence process. You can prepare for due diligence by ensuring all business records are organized and readily accessible.
Due diligence involves sharing confidential information, so it's important that you implement strict confidentiality agreements to protect your data. Be transparent with prospective buyers to prevent misunderstandings or disputes. It's vital that you disclose all relevant information upfront.
Along with due diligence, a business broker will likely conduct physical inspections to assess your company's premises, assets, and facilities. In case any issues arise as a result of the inspection, be prepared to address them promptly and maintain professionalism.
Being proactive and collaborating with potential buyers will help you expedite the negotiation and closing processes, putting you one step closer to selling your business.
Selling your business doesn't end with closing the deal. In fact, there are several post-sale considerations you should keep in mind. There are various tax implications of the sale, meaning you should work closing with tax professionals.
Seek advice from tax advisors to help you understand tax implications and minimize liabilities. Here are just a few tax implications to discuss with your accountant:
- Capital gains tax
- Installment sales
- 1031 exchange
- Qualified small business stock (QSBS) exemptions
- International tax implications
Along with tax implications, you should prepare for how you will manage your proceeds. Wealth planning can help you manage your money and make smart investments.
After working so hard to build a business and sell it for a profit, secure your financial future by developing a financial plan. With your influx of proceeds from the sale, consider diversification, estate planning, wealth preservation, charitable giving, and risk management.
Finally, it's time to enjoy the fruits of your labor! Building and selling a business is no small feat. But with strategic advice, online courses, and innovative tools from Mailchimp you can sell your business with a foolproof plan. From creative email marketing campaigns to social media marketing and more, we're here to help your business thrive along every step of the journey.