It’s time to tie up those loose ends before you wave goodbye to your business.
By Craig Falck of Africa Report
Photograph: © Peshkova | Dreamstime.com
So you’ve decided that it’s time to sell your business. There’s a lot more to it than just putting an ad in the classifieds or a “for sale” sign in the window. In fact, it’s downright difficult to sell a business! Here are a couple of things you need to know about selling your enterprise…
You can’t sell a business if your paperwork isn’t in order. Legal documents, company documents, financial documents… everything needs to be 100 percent accurate and compliant with the rules and regulations that govern it. You can’t sell a business if your property rates and tax accounts are in arrears. Nor can you sell it if there’s an outstanding amount on water and electricity. The best thing to do is go to the bodies responsible (your local municipality) and get an account statement so that you can see what needs to be paid. Likewise, visit your accountant to make sure that they have everything in order when it comes to your taxes and other financials. Your accountant will play a very important role in the sale of your business, so they need to be on top of their game.
You also need to do a company stock take and valuation. You can’t just guess a figure that you’d like for your business. A selling price needs to be carefully worked out and the only way to do this is to use the valuation tools mentioned in Africa Report last week. There’s an acid test ratio, liquidity ratio, rate of stock turnover and various other formulas and equations that will indicate how healthy your business is, how it’s performing, and what it’s worth. Then you can play around with that figure and decide what fair value for your enterprise would be. If you have partners, you will need to discuss this with them and come to an understanding.
Obviously there are also legal aspects that need to be taken into consideration, like the deed of sale and clauses in the contract. Either your accountant or lawyer will be able to do this – just make sure that you’re entirely satisfied with the deed before putting your signature anywhere.
While it’s not technically something that you need to do, it’s in your best interest to make sure that your staff will be taken care of properly. Sure, it’s your business and you’ve worked hard and should be compensated for getting your business to where it is, but just remember that there were a lot of other people involved who worked their butts off to help you. So try to find a seller who will carry on your legacy and continue to build your business, keeping the staff on. It’s also in the new owner’s best interests to keep the staff as they know what’s going on in the business and will be able to help it become even more successful.
Selling a business is as easy or as complicated as you allow it to be. If you’re prepared, it’ll go smoothly. If you’re not, well, prepare for a struggle.
