Around the Web: A Week in Summary
A recently published article on BusinessBroker.net entitled “Five Key Steps to Take Before Selling Your Business” explains important steps a business owner should take in preparing to sell their company.
- Decide why you want to sell
- Get your financials in order
- Take yourself out of the picture
- Choose a business broker
- Decide if the time is right
While these steps may seem obvious to some, many owners do not prepare themselves or their business properly to position for a positive outcome. Rushing into a sale can result in some of the worst sale outcomes, so taking the time to properly prepare is paramount for a successful transaction.
A recent article published by Divestopedia entitled “The Only Valuation Method that Really Matters” explains the best method to use to value a business: the Business Buyer Valuation Method. While there are certainly other valuation methods, the author suggests that this one is the best and will bring you close to what a buyer is actually willing to pay.
Steps like determining who the most likely buyer is for your business and how this buyer may structure the transaction, among others, will help a seller build a valuation that will both make sense and be fair for a potential buyer.
A recent Forbes article entitled “Earn-outs Can Help Eliminate the Risk When Buying a Business” explores the use of earn-outs to mitigate the amount of risk in a business transaction for a buyer. These earn-outs spread the risk between the buyer and the seller, while helping to validate seller’s claims and ensure their business performs as stated in the contract.
The key to successful earn-out agreements is to keep them simple: simplicity and clarity are important in understanding how the sale will play out and how each party will get the deal that was agreed upon.