The most popular exit strategy for small businesses
If family succession planning isn’t viable, and there is no company insider who is willing and able, then an arm’s length sale on the open market may be an option. This is the most popular exit strategy for small businesses. The business owner lists the business for sale and – we hope – ends up with a healthy sales price.
Groom your business for the sale
If you are targeting investors looking for an attractive opportunity, spend some time grooming your business for sale to make it as attractive as possible. A great potential buyer is another business in your industry that is looking for a strategic acquisition to simultaneously expand into a new market while eliminating a competitor.
The key is to target your potential acquirer(s) in advance and position your company accordingly. And of course, convincing your acquirer that your business is worth what you want for it.
Get a professional business valuation before naming your price
There are numerous business valuation formulas ranging from asset-based to future earnings approaches. But no single method can be used in isolation because market trends, economic conditions, and comparable sales also influence what buyers are willing to pay. If you have the resources, hire a professional business appraiser to do a valuation before you set the price. A professional business valuation will increase credibility and may save you legal hassles later on.
Listing your business for sale
After determining the price, an owner can list the business for sale on various business sale websites. Some sites permit sellers to list their businesses directly (think “FSBO” for a house), while others limit access to business brokers. Typically the sites charge a listing fee, but some, such as GlobalBX, are free. Business broker and consultant Eric Williams of Codiligent, LLC recommends that sellers not limit themselves to a single website when listing. Williams notes that many buyers are cognizant of some business sale sites but not others, so to get maximum exposure he recommends that owners list their business on as many as possible.