Selling Your Business: Finding the Right Time

Business Broker

Selling Your Business: Finding the Right Time

As a business owner, you will at some point likely make the decision to sell your business. Whether you have owned the business for many years or only a few years, you will probably wonder if it is a good time to sell your business. People sell businesses for various reasons, some of which are retirement, health, disputes, burnout, stress, trading up, relocation, and financial hardship. There is one thing to remember that is always true. The best time to sell a business is when it is profitable and growing.

You will need to prove the value of your business, and this is accomplished by providing accurate financial statements. It is typical to show income statements and tax returns for the past three years. That shows a constant level of income, a growth each year, or a decline. The business will be worth more if the financials show growth. If you have not shown all of your income in order to pay less taxes, the business will be worth less, as the cash flow will be less. If possible, it would then be best to keep the business for a couple of years and show all of your income. There are expenses you can add back to your bottom line, giving you a larger cash flow and a higher selling price. They are personal expenses, one-time expenses, and expenses not necessary for the operation of the business. Your business broker will explain all of these to you and add them back on your cash flow statement. It is important to remember you must be able to prove all add backs, and a provable set of books is a top priority to a buyer.

As stated earlier, the best time to sell a business is when it is profitable and growing. If you are ready to sell or think you will be in a few years, a business broker can guide you with the proper steps to take to prepare for the sale. Contact Moche Hazout at Transworld Business Advisors today!