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Conference Room

Questions to Ask When
Selling a Business

Selling a business is a significant decision that involves numerous considerations to ensure a smooth and beneficial transition. To help guide you through this process, here are some key questions to consider:

Why am I selling?
  • What are my primary reasons for selling the business?

    • Am I looking to retire?

    • Is it due to financial, personal, health or strategic reasons?

  • How does selling align with my long-term personal and professional goals?
     

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When is the right time to sell?
  • What internal factors should I consider when deciding the best time to sell?

    • Is my business currently experiencing peak profitability?​

    • Have I established a solid managerial team that can operate the business without me?

  • What external factors or market conditions should I consider before selling?

    • Is the industry growing or declining?​

    • What are the current economic trends affecting businesses like mine?

    • Are there upcoming changes in regulation or taxation that could affect the value of my business?

    • Is there a demand surge that I can capitalize on

  • What is the ideal time of year to being the selling process?​

    • Are there seasonal trends that affect my business' performance?​

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How do I value my business?
  • What valuation methods are most appropriate for my type of business?

    • Should I use asset-based, earnings multiplier, or cash flow valuation methods?​

  • Who can assist in accurately valuing my business?​

    • Should I consult an investment banker, professional appraiser, a business broker, or a financial advisor?​

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What should I prepare for the sale?
  • What financial documents are necessary for the sale?

    • Are my financial statements up to date and accurate?​

    • Do I have records of taxes, debts, contracts, and leases?

  • How do I prepare my business to be appealing to buyers?​

    • Should I resolve any outstanding legal issues or disputes?​

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Who should I involve in the selling process?
  • Should I hire an investment banker, business broker, or sell independently?

    • What are benefits of working with an investment banker or broker versus managing the sale myself?​

  • What legal or financial advisors do I need?​

    • Who can help with the legal aspects of selling a business?​

    • Who can advise on tax implications and financial planning post-sale?

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How do I market my business for sale?
  • What channels are effective for marketing my business to potential buyers?

    • Should I consider online business-for-sale marketplaces, industry contacts, or professional networks?​

  • How do I maintain confidentiality while marketing the business?​

    • What information should be disclosed to potential buyers and at what stage?​

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What are the key terms to negotiate in a sale?
  • What are the most important terms I should negotiate in the sale agreement?

    • How will the purchase price be structured - lump sum, earnouts, seller financing?​

    • What warranties and indemnities will I need to provide?​​

  • How do I handle the transition period with the buyer?

    • What level of support and training will I provide to the new owner?
       

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What are the common pitfalls to avoid when selling?
  • What are some common mistakes sellers make during the selling process?

    • How can I avoid undervaluing my business?​

    • What are risks of not vetting buyers thoroughly?

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What are the financial implications of selling my business?
  • What are the typical costs involved in selling a business?

    • ​What fees can I expect to pay for legal, brokerage, and advisory services?​
    • Are there any hidden costs, like taxes or penalties for settling debts early?
  • How do I minimize the costs associated with the sale?​
    • Are there cost-effective alternatives to traditional brokerage services?​
    • Can I negotiate lower fees with service providers?

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What is the process of selling a business? 
  • What are the key steps in selling a business?

    • What information will I need to gather for my advisor and to prepare marketing materials?​

    • What happens during the go-to-market process?

    • How important is the auction process?

    • What things do I need to be aware of during the due diligence and negotiation processes?

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What should I do after selling my business? 
  • What financial planning should I consider after the sale of my business?

    • How should I manage the proceeds from the sale?​

    • What tax planning strategies should I consider?

  • How do I adjust to life after selling my business?​

    • What new career or personal pursuits might I consider?​

    • How can I maintain a sense of purpose and fulfillment?

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These questions focus on understanding the reason, timing, and financial aspects of selling a business, as well as ensuring that you are prepared for the post-sale phase. Addressing these considerations will help you optimize the sale process and the transition that follows.

 

Seeking the help of an M&A advisor as soon as possible, ideally 3-5 years before intending to sell your business, will ensure you get the best advice possible, saving you time, money, and effort. 

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