Selling a Business in Washington State
When selling a business in Washington State, there are some key aspects to keep in mind such as involving an experienced lawyer.3 min read
When selling a business in Washington State, there are some key aspects to keep in mind. You'll want to get an experienced lawyer involved to make sure that all of your bases are covered and you don't end up in a bad deal.
Basics of Selling a Business
First, you'll want to plan ahead so you're completely prepared for selling. This may mean that you discuss and plan the sale of your company one or two years before you plan to take action. Planning ahead is ideal because you'll likely need to adjust some aspects of your company before it's ready to sell. You'll also want to make sure that your documentation is clear and well-kept so that it can be easily handed over to a buyer.
As you plan to sell your business, ask yourself and fellow business owners these basic questions:
- Why do we want to sell?
- Why should we sell?
- Why should anyone want to buy our company?
- When is the right time for the sale?
Requirements For Selling a Business
Once you find a buyer for your business, they'll need a minimum of three years of your past financial documentation. This includes your company's tax returns and an up-to-date balance sheet. You'll also need to provide the last year's worth of financial statements, each month included. This will show the buyer any fluctuations throughout the year due to seasons or other factors.
All company assets that are for sale should be clearly listed and their supportable or current book values should be included. You might also need to include details like:
- Business licenses and permits.
- Vendor contracts.
- Lists of suppliers.
- Marketing materials.
It can be very difficult to properly value your own company as you have a personal investment in it. Getting a professional valuation will help you clearly see what your business is worth, even if it is a small business. This will help you find a suitable asking price so you can be in a good range to find buyers. A professional valuation will also make it clear if there are parts of the business that need improvement before selling.
Valuation for a business takes the following into consideration:
- Asset values.
- Discretionary cash flow.
Be Ready for a Sale
When planning to sell your business, you'll also want to develop a marketing strategy. You'll need a marketing package and action plan. Decide whether you're okay with negotiating with buyers. If you determine that you won't do well with negotiating because of an emotional attachment to the company, you might want to consider using a broker or agent to handle the sale.
Make sure you're ready to show your business to potential buyers at any time. Think of it like trying to sell your home. You'll have showings and need to be ready to make a sale anytime someone is interested.