Selling Your Company? Take These Steps to Maximize Your Profit

If you are planning on selling your company now or sometime in the future, there are 3 strategies you should use to get as much cash out of your hard work in building the business as possible:

Pre-sale planning. Look for opportunities to increase the sale price of your company. The first step is having a current valuation of the business as well as financial statements prepared that accurately portray the value of the company.

In addition, you will want to look for ways to increase profitability as buyers are more willing to pay more for businesses that can generate profits quickly. If possible, seek to establish long-term agreements with customers to demonstrate a recurring revenue source and with vendors to lock prices in at the lowest possible rate.

Pre-sale tax planning. Examine your company’s tax situation and that of your family as well prior to any sale, then look for ways to minimize any taxes that could result. For example, you may want to restructure any assets not used in the business to be sold apart from the company or use them for other purposes. You should also look into the use of trusts to freeze the value of the business so that when it is sold, estate taxes will be less. If you are so inclined, charitable trusts can be used to eliminate capital gains taxes.

Negotiate skillfully. All the planning you have done prior to the sale of your company will help you be a more skillful negotiator. Take the time to understand the motivations of the buyers, which can provide excellent insight you can use to your advantage when negotiating the highest possible price for your company. Enlist the help of an experienced business attorney who has likely been through this many times before and can use their knowledge to help you negotiate more successfully.

Taking these three steps will help you position yourself to get the best price for your business and help you increase your family wealth.