Selling a Business

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Buying a Business

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Valuing a Business

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Archive for Selling

Jul
26

Questions When Selling Your Business

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Are you planning of selling your business? You need to ensure that everything is in place for you to sell the business at the right price. To help you out here are some of the questions that you should ask yourself as a business seller. When selling your business:

  • What Are The Things That A Buyer Will Look For In My Business?

There are many things that a buyer will look for when buying your business. Some of these things include: product lines, management structure, compatibility of operations, and customer and market base.

The buyer will also review your financial condition which includes: tax returns, payroll records, financial statements and depreciation schedules. If there are any employees in the business the buyer will like to know about their employment contracts.

  • How Do I Determine The Value Of My Business?

It’s easy to determine the value of your business, if you plan to sell it. All you need to do is to hire a business broker/ certified business intermediary to do the valuation for you. The intermediary will consider a number of factors in order to come up with the value of your business. Some of these factors include: assets, cash flow, market share, customer base, and financial history.

  • When Is The Right Time To Sell My Business?

The right time to sell your business is when everything is in place. You should wait until your business is viable and you can predict that it’s going to have an exponential growth. You should also wait until you have prepared all the necessary documents and you have a professional exit strategy.

You should never sell your business when you are desperate. For example, you shouldn’t sell your business when you have a pressing loan that you need to settle. This will not only give you stress, it will also result to you selling the business at a very low price.

  • Should I Tell My Employees That I’m Selling The Business?

You shouldn’t tell your employees about it. This is to avoid the repercussions that come with telling them. Some of the repercussions include: key employees looking for work elsewhere, competitors bad-mouthing you, vendors shortening terms and banks calling in notes.

You should maintain confidentiality and only let the employees know about it only after you have completed the selling process and the new owner is ready to start operations.

Conclusion

These are some of the questions that you should ask yourself when selling your business. To complete the selling process flawlessly you should consider working closely with a professional advisor.

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Jul
25

Due Diligence

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>> What Is Due Diligence in Business Sale?

Due diligence is where you verify the information given to you by a business seller. The seller should give you access to the books of accounts and any other information that will help you in confirming that the business is making profits and will be profitable in the future. An ideal due diligence should be able to highlight any issues or problems that might need to be warranted or guaranteed.

Types of Due Diligence

There are three types of due diligence that you can do:

  • Legal: here your lawyers need to check and confirm if a business has the legal title to sell. The lawyers also need to determine whether a business owns all the assets. If there are regulatory or litigation issues, the lawyers have to ensure that the business seller addresses them before you can progress with buying the business.
  • Financial: here you need to check the financial records of the business to ensure that there are no black holes or any hidden financial issues. For ideal results you should work with a professional such as an accountant who will help you in identifying any faulty areas.
  • Commercial: this is where you find out how well placed the business is in the marketplace. You can easily do this by checking the competitors and the regulatory environment.
When to Begin

As a business buyer you should begin due diligence after you have agreed on the price and terms of sale. You should note that the seller will most likely ask for a down payment in order to secure the exclusivity period.

Although, you can negotiate on the period, you shouldn’t take more than four weeks to complete the entire process. To complete the process fast you should work with accountants and solicitors who will help you in identifying the risk areas.

What Should Be Contained In the Report?

There are many things that should be contained in the due diligence report. These things include:

  • Finances: these are financial statements, capital structure, financial projections and taxes.
  • Products: you should describe the products in detail. You should describe the products that have high sales and those that have low sales.
  • Competition: who are the main business competitors?
  • Management: it should include the company’s organization chart, biographies of senior management and any other information.
Conclusion

This is what you need to know about due diligence when buying a business. To have an easy time you should ensure that you work with professionals

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At ProClient Brokers, we pride ourselves on being able to provide brokerage, franchise sales, business sales, and real estate services to our valued clients assisting in sale and acquisition of properties in Toronto Area, Ontario and beyond. As brokers, we understand what makes a good deal in a transaction.
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