Pursuing Ownership in a Small Business Towards the End of the Financial Year

If you are looking to dive into entrepreneurship and run your own business, you have two choices before you – one, to start the business from scratch – which is the more traditional approach, and two, to buy an existing business – which is the new age mantra for starting a business quickly and easily.

Did you know? Buying an existing business can lead to a better visibility of immediate cash flow, proven financial history which makes it easier to secure loan and investment, established network of customers and suppliers, well-defined market for products and/or services, and an experienced team to rely on.

As a prospective buyer, you may believe that all months of the year are equally important when buying a business, but the truth is that some months of the year are more favorable than others. The last couple of months in a financial year are often believed to be the most favorable months for buying a business.

Let us tell you why?

  1. Visibility of Last Year’s Performance – The potential buyer gets a very good idea about annual sales, operating profit and net profit of the small business being sold. More than three quarters of performance available makes it easy to extrapolate annual financial performance. This also makes it easier to perform due diligence of assets, liabilities and other financial accounts.
  2. Cashflow Overview – Potential buyer has reasonably a good idea about the surplus cash flow that his existing business or profession is likely to generate during the year. Payments related to buying a business can synchronize the timings of cash flow generation and utilization.
  3. Tax Benefits – There are possible tax saving opportunities if a loss-making business is acquired and merged with a profitable business. It becomes easy to quantify possible reduction in tax liability if the loss-making business is acquired towards the end of the financial year.
  4. Motivation of Business Sellers – Business sellers are likely to be more motivated to make a transaction around this time of the year and make a fresh start in the new financial year.

As we draw the curtains on Financial Year 2017-18, it is an excellent opportunity to close a business transaction (Mergers & Acquisitions, Business Exit, Raise funds, Investment Opportunities) that you have been waiting for or to start preparing for a great deal in the next year. Remember, it’s never too late or too early to seize a business opportunity – make the best of your time and resources!

Credit: This article is written by Prof. Mayank Patel, he is the valuation and financial planning expert at team indiabizforsale.com’s advisory service arm. He is a professor at EDI, Gandhinagar. He is also a qualified investment advisor. 
B. E. (Electrical), M.B.A.(Finance), PGD in Treasury & Foreign Exchange Management, CFA(USA).

Avoid These 3 Mistakes When Selling Your Business

“Win or Learn – That Way You Never Lose”

If you are planning to sell your business, and especially if this is your first time, you must be getting a little overwhelmed with all the advice you receive from all corners. Are you wondering if there are any common mistakes that you can avoid? You are right. We have worked with thousands of business owners over the last 5 years and in this post, we share with you the 3 most common mistakes most business owners make when selling a business, and how to avoid them.

  • Not Accounting for Sale Preparation: Even if you are a pro when it comes to selling your products and services, selling your business is not nearly the same and requires extensive preparation, commitment and resources. So, don’t rush into this. Start preparing from day 1 when you decide to sell your business. Depending on the nature and condition of your business, you would need anywhere as the bare minimum time for effective sale preparation up to as much as a couple of years. We have seen business owners being forced to lose clients, accept a lower valuation, lose control of business and go through unwanted frustration –simply because they didn’t give themselves enough time. Our post here tells you how to prepare your business for sale. This preparation includes creation of second line management and delegation of important responsibilities, establishing and consolidating systems, policies and structures, sorting out financial and other documents / records, creating mechanisms to manage existing clients without disrupting long-term contracts, and so on. Then comes the second stage of preparation, when you will have to prepare for pitching to prospective buyers, which encompasses activities like pitch preparation and presentation, preparing for common questions that most buyers ask, compiling documents for primary scrutiny and so on.
  • Poor Choice of Buyer Outreach: How do you attract prospective buyers without upsetting customers and employees? There are two important things to remember here – ‘targeting’ and ‘confidentiality.’
    Many of our users tell us how they wasted precious time and money on ads in newspapers and magazines – without much results. Why? Because ads are less likely to give you the targeted reach that a technology platform like Indiabizforsale.com does. At the end of the day, you will have higher chances of finding a deal on a platform that brings together thousands of buyers, investors and businesses.
    Secondly, it’s best not to give away the identity of yourself or that of your business until a deal is on the table. When you tap into your personal network, chances are that word spreads and reaches your customers too. Our confidential, hassle-free messaging system addresses this problem for our users.
  • Quoting an Unrealistic Valuation: In our experience, unrealistic valuation is one of the primary deal-breakers. Over-pricing your business makes it unattractive to a buyer right at the outset. Not to mention, your integrity becomes a question. Now, many business owners don’t over-price their business intentionally – they simply don’t know the right valuation for their businesses. The way out? Hire an expert valuer who understands your industry. Remember – always opt for a credible valuer with strong track record. At Indiabizforsale.com, for example, we have an independent valuation expert with over a decade of experience and strong professional credibility, who helps businesses with detailed valuation reports as a value-added-service (know more).

So, what are you waiting for? Start preparing to sell your business and stay tuned to our blogs and other resources to help you along the way.

Should I Use a Consultant to Sell my Business?

“Do What You Do Best – Outsource the Rest”

Every business owner looking to sell his business has asked himself this question at some point or the other. If you are wondering how we know this, it’s because we have worked closely with thousands of business sellers over the last few years. So, who are consultants? In simple terms, consultants are deal experts, who can help with industry-specific deal sourcing, legal implications, taxation, accounting and negotiation. Finding a serious buyer is a tedious task especially while you are still running your business. Hiring a consultant can free your time to concentrate on managing the business while the consultant would plan and implement the necessary leg-work for your deal.

Primarily, a deal consultant helps both business buyers and business sellers with deal sourcing, i.e. discovering prospects based on preferences. But how do you decide whether to hire a consultant or not? We are here to help you out – we have listed down a few factors for you to keep in mind when deciding whether to hire a consultant or not.

  • Deal Value

This refers to the price or the price range at which your business is expected to be sold. While there is no hard and fast rule – it is believed that for deals below INR 5 Cr. it might not be worthwhile to hire a consultant. This is because the consultancy fees might prove to be too much with respect to the deal value. Consultants usually charge a percentage of the deal value as a commission and a retainer fee in some cases. 

Wondering what the approximate deal value could be for your business? Our blog here tells you everything you need to know about business valuation.

If you are in a niche industry and have no other way of sourcing buyers but to hire a consultant to manage your deal, it might be worth loosening your purse strings. However, if sourcing buyers is your only concern, you could try listing your business at Indiabizforsale.com first and explore the inquiries you receive.

  • Your Experience

If you have prior experience of selling one or more businesses (either your own venture or a business owned by somebody else), or if you are a deal professional with expertise in closing business sale deals, you might not need a consultant. However, it might be useful to note that if you have not sold a business recently, the past experience may not necessarily or fully help you in selling your current business, as the industry standards could have changed, applicable compliance provisions could have altered, and you might not be fully aware of those.

If you are selling a business for the first time, these top 5 tips can make your life easier.

  • Availability of Consultants

Availability of consultants is another important aspect to be considered. As a matter of fact, good consultants with a proven track record and necessary industry exposure are often not easily available. A tested way to source good consultants is to request recommendations and references of professionals in your network whom you trust – but unless you belong to the business buy / sale network, it is unlikely that you will receive a lot of good recommendations.

We hope that this article helped clear the air about how to go about deciding if you need a deal consultant. In the end, whether you choose to hire a consultant or not, both the decisions will involve a few risks. Focus on considering which scenario is more suitable for you.

To know more about how to go about selling your business, stay tuned to our blog and other resources. Feel free to write explore IndiaBizforSale.com.

Top 5 Things to Do to Sell Your Business Quickly

“A ship in harbour is safe, but that is not what ships are built for.”

-John A. Shedd

Are you a business owner looking to sell your business? Are you searching for the best tips to make it happen?

Then, you are at the right place. Indiabizforsale.com has helped thousands of business owners, business buyers and investors in buying, selling and growing businesses as well as in investments and fund-raise for businesses. By working closely with our users and having closed numerous deals, we are in the best position to share with you the top 5 things you should start doing right away to sell your business quickly. Here are our top picks for you:

  • Organize Your Business Information: The first thing you must do is compile, assimilate and sort all the pieces of business information together and categorizing them for easy access and retrieval. Make sure you have audited financial statements in place at least for the last 3 years (if applicable), put together your business policy documents, receipts, invoices, appointment letters, contracts, past deal documents, agreements, intellectual property documents, technology specifications, market research reports, and so on. You will be surprised by how much time you save when buyers actually start seeking these information from you.
  • Polish Your Business Pitch: Did you know? For most sellers, the toughest questions to answer are: “Why do you want to sell your business?” and “Why should I buy your business?” Communicate the answers honestly but intelligently and try to establish the fact that your business is a viable proposition to buy. A common misconception is that only profitable businesses are viable opportunities, but you will be surprised to know that there are many takers even for sick businesses with future potential. Know more about how to sell your sick business.
  • Make Some Noise: This is a no-brainer. No one will buy your business if they are not aware that it is up for sale in the first place. You can reach out to your personal and professional networks, or post classified ads in newspapers, magazines, trade journals and directories. However, remember that by adopting these conventional approaches, maintaining confidentiality of yourself / your business might be at risk, and this might harm your business in the long run. The best option is to list your business for sale with technology platforms that assure anonymity, such as Indiabizforsale.com – India’s most preferred network to buy, sell, fund and grow businesses.
  • Hire a Consultant: If your business is in a niche industry, or if you are looking to sell your business urgently, hiring a consultant with good track record and credibility in your industry or related industries is a good option. It is often difficult to assess the credibility of a consultant. Getting references from your network as well as consulting multiple resources before choosing the right one is the best way to go.
  • Qualify Buyer Inquiries: We have seen many sellers wasting their precious time on buyers who are not really interested in buying their businesses. Not only does it slow-down the process, but also there’s a risk of critical information of your business reaching the wrong people. Qualify buyers in terms of their interest in your businesses, and only share critical information if you think that the buyer is serious about your business. You can also request the buyer to sign a Non-Disclosure agreement (NDA) before sharing sensitive information. Read NDA and 3 Other Deal Documents You Should Know About. Optimize the time you spend on a buyer by sharing information in a compact and step-by-step manner, and keep track of the discussion progress. Don’t be afraid to ask your own questions to get clarity about the buyer.

When it comes to selling a business, keeping the momentum high and maximizing your reach is more important than anything else. At Indiabizforsale.com, we are committed to making deal-discovery a seamless experience for all. Stay tuned to our blog for more useful articles like this, and explore our website for more.

Should You Buy a Business or Invest in One?

If the idea of buying a business or investing in one excites you – you are not alone. Thousands of first-time buyers and investors join the crowd every year. For some, it is the idea of testing their entrepreneurship acumen in an existing business, while for some it is about making their money work hard. However, for many people, the decision is not easy to make – should you buy a business or invest in one?

We have worked with thousands of business owners, buyers and investors over the last few years and have closed multiple deals – both in business buying and investing. In this article, we will share a few practical insights from our team to help you understand the varied implications of buying and investing in a business. We recommend that you begin by asking yourself the following questions – the answers will help lead the way towards the most suitable opportunity for you.

  1. What is Your Primary Objective?

Are you looking for complete ownership, control, and a deep-dive into entrepreneurship? Are you excited about building your dream venture? Do you want to be your own boss? If the answer to all of the above is ‘yes’, then buying a business is more suitable for you. Investors are limited in terms of the amount of control and decision-making power they exercise in a business. Of course, there are various rights of an investor that you can exercise to significantly step-up the amount of control you have – but the owners are still going to have the final say and a much higher involvement in running the business.

  1. What is Your Professional Background and Industry Experience?

Do you have some experience in the industry to which the business belongs? Do you have prior experience in running a business – either first-hand or through a family member? Do you have adequate network in the relevant domain? If yes, then buying and running a business on your own will be a lot easier and more appropriate. However, if you are not sure about your background and experience being a good fit for the business, then investing in it might be a sound proposition.

  1. What are the Resources at Your Disposal?

Resources are critical when it comes to running a business. Does the business have an existing, well-established team, or do you have to build one yourself? Is there a loyal client base that you can rely on? Are the distribution networks on auto-pilot or will they require your constant supervision? Is the raw material coming steadily from an assured supply base, or is vendor management going to be a constant headache? If most of these pieces are sorted out, buying is a lucrative possibility. However, if the business is of high potential but still needs a lot of fixing, it might be better to invest your money and help the owners figure it out with whatever you can.

  1. What Are Your Existing Commitments?

In reality, the decision to buy or invest in a business is not isolated from other decisions in one’s life. Contrary to popular belief, there is no ‘right time’ to buy or invest in a business. There are no rules – anyone can put money in a business at any point in time, provided their existing commitments are in sync with the decision. Having a wonderful day job that you absolutely love? Invest in a business. Looking for a career transition? Consider buying your dream business. Have significant financial commitments towards your family? Start by investing in a business – consider buying one later. Looking to build an enterprise that will sustain your family for generations? Go for buying a business. These are just a few examples – the best way to go about it is to map all your personal and professional commitments to the two options (buying and investing) and arrive at the best opportunity for yourself.

So, what are you waiting for? Choose the option that is best for you and take the plunge! We have helped thousands of business buyers and investors in choosing the right business opportunity through our platform. We help you get matched to the right businesses, communicate confidentially with business owners, and much more. Register with us today to kickstart your journey, or write to us at [email protected] to know more about what we do and how we can help you.

What’s New? – Exciting Updates You Can’t Afford to Miss this October

Newsletter Issue 54
October 2017

IndiaBizForSale.com Cordially Invites You to Business Buyer’s Club, Mumbai

What’s in it for you: This is a one-of-its-kind event to discover business opportunities and buyers/investors from Maharashtra and Gujarat engaged in Pharma, Healthcare, FMCG and IT/ITES sectors.

What to expect: Businesses pitch alongside focused interviews, followed by one-to-one meetings with business owners – only high-potential businesses hand-picked by our senior analysts will make it to the showcase.

Types of Business Transaction: Joint Venture | Business Exit | Acquisition | Fund Raise

Why Business Buyer’s Club: The last event was organised in association with GCCI and FICCI in September 2017 and saw a showcase of 9 business opportunities to 45+ credible buyers/investors with 4 business currently in the final stages of closing the deal.

Further Details: visit Business Buyer’s Club / write to [email protected]

Discovering Business Opportunities is Now Easier

You now have the option to ‘search’ for business buy / sale / investment opportunities matching your preferences, instead of having to browse through thousands of listings. Simply enter your preferences in the search bar on our home page (www.indiabizforsale.com) and matching listings will be automatically listed on the screen!

We have been busy! At IndiaBizForSale.com, we are constantly trying to make things easier for you. One such recent feature that has been keeping us busy for the last few months is the all-new ‘search’ bar.

You now have the option to ‘search’ for business buy / sale / investment opportunities matching your preferences on our platform, instead of having to browse through thousands of listings. Enter your preferences in the search bar on our home page and matching listings will be automatically listed on the screen.

This is how it works:

  1. Visit our home page – www.indiabizforsale.com
  2. You can see the search bar right there on the screen (see image below)
  3. Enter as many parameters as applicable to you. E.g. if you are looking for business opportunities in Ahmedabad, enter the location as ‘Ahmedabad’. If you are looking for Pharma businesses in Ahmedabad, enter the industry as ‘Pharmaceutical’. Not getting the location or industry of your choice? Make sure you have entered the correct spelling!
  4. If you are looking to buy or invest in a business, click on ‘Buy/Invest’. If you are a business owner looking to sell your business, raise investment, or growth partnerships, click on ‘Sell/Grow’.
  5. A list of businesses matching your criteria will be displayed on the screen.
  6. Not getting enough results? Try to relax a few search parameters.

Visit our platform today and try our ‘search’ feature to get the listings matching your preferences with just a click.

SME Highlights

* GST Council decides to provide relief to SME sector

CII Director General has said that the SME sector compliance will greatly improve as limit for composition scheme has been increased to Rs 1 crore.

India Inc today welcomed the outcome of the GST Council meet and said the decisions will improve compliance and provide much needed relief to the taxpayers. CII Director General Chandrajit Banerjee said that…  Read More

* Amazon India launches Amazon Business to enable easier procurement for SMEs 

Amazon India has launched Amazon Business, a B2B marketplace on Amazon.in, to enable small and medium businesses to procure products through the platform. The platform, which will be available on the Amazon website, is registered under the main entity Amazon Seller Services.

The launch comes two years after…Read More

How NOT to Sell Your Business!

If you are planning to sell your business, and especially if this is the first time you are thinking of doing so, you must be wondering about what pitfalls to avoid from early on. While there are no hard-and-fast rules…we have realized that there are a few common mistakes that sellers often make which can be easily avoided.

In this article, we will share these 4 common mistakes of business sellers with you, and our expert advice on how to handle these scenarios instead ….. Read more

How NOT to Sell Your Business – 4 Mistakes that Business Sellers Make

If you are planning to sell your business, and especially if this is the first time you are thinking of doing so, you must be wondering about what pitfalls to avoid from early on. While there are no hard-and-fast rules, in the course of working closely with thousands of business owners, buyers and investors over the last few years, we have realized that there are a few common mistakes that sellers often make which can be easily avoided.

In this article, we will share these 4 common mistakes of business sellers with you, and our expert advice on how to handle these scenarios instead.

  1. Waiting for Too Long to Initiate the Sale Process

Believe it or not, most sellers struggle with the decision to sell their business, and even after they decide, they often delay the process. We understand that business owners have an emotional attachment to their business which is one of the primary reasons for this inertia. However, the more you delay the process, the less the situation stays in your control. Once you have decided to sell, tell yourself that there is no looking back and that you will make the best of this opportunity. Start sourcing buyers from dedicated platforms like IndiaBizForSale.com for quick deal discovery, and simultaneously focus on preparing your business for sale – which brings us to the next point.

  1. Not Taking Sale Preparation Seriously

The common question that sellers ask is – my business is going great, why should I prepare it for sale? Another question that we get asked frequently is – how should I prepare my business for sale?

The important thing to remember here is that irrespective of how well your business is doing, you can maximize the sale value and streamline the sale process by preparing your business for sale. Sale preparation involves identifying areas which need attention and working on those with a fixed timeline in mind – typically between 1 to 3 months. For example, optimizing team structure, sorting out financial records and documentation for due diligence, getting a realistic valuation for your business by an expert, addressing any legal issues, streamlining processes, resolving disparities, etc. are some of the activities that can be undertaken during sale preparation.

  1. Missing Out on Pre-Qualifying Buyers

Ensuring confidentiality and pre-qualifying buyers before sharing sensitive information is perhaps one of the most critical areas that business sellers often miss out on. Remember, that you should not reveal your own identity or the identity of your business until a buyer has shown adequate interest. Sharing the financial details of your business, business strategy, trade short-cuts, etc. should be done when the discussion has proceeded to an advanced stage – i.e. when the buyer has established explicit and serious interest in buying your business. Sharing any critical information such as trade secrets, client list, or intellectual property such as product formulations, etc. is recommended only when an MoU has been signed. At IndiaBizForSale.com, we help business sellers communicate confidentially and securely with business buyers and investors through our platform.

  1. Not Marketing Your Business

Can a business sell itself? Not really – and this is where business sellers sometimes get it wrong. To put it simply, no matter how good your business is, you will still have to market it, and no matter how bad you think your business is, marketing can still help you get buyers faster than any other way. In today’s growing digital world, online marketing campaigns are more important than ever, and even trumps print ads in newspapers in terms of results and cost effectiveness. In fact, keeping this in mind, we provide dedicated marketing services especially for business owners who are looking to sell their business urgently and who opt for these services with us. We help market such businesses efficiently and confidentially while maximizing the reach to the target audience.

So, what are you waiting for? Jump-start your business sale process today and avoid the most common mistakes that most sellers make. Stay tuned to our blog for more such insightful articles. To know more about what we do and how we can help you, visit www.indiabizforsale.com or write to us at [email protected]

IndiaBizForSale.com Just Crossed 2500 Business Listings! – Here’s Our Journey So Far

IndiaBizForSale.com started in 2013 with the core mission of helping small and medium business owners sell their businesses instead of closing shop. Back then, we were largely business owner(seller)-centric – i.e. only sell-side listings existed on our platform and made a humble beginning with just 50 businesses looking for exit listed on the platform.

The first revelation happened when we discovered that our platform could also serve buyers and investors in a large way. While we always had buyer registrations, we soon noticed that the number of registered buyers on our platform was 2-3 times more than that of the sellers, and yet we did not have any buyer listings yet! We were constantly receiving inquiries from them and soon we realized that we would need to focus on buy-side listings as well and showcase their requirements.

After a while, we again widened our scope in another direction – this time towards expanding the kind of transactions we supported. While our platform always had the option of part-sale, it was focused more on asset-sale and sale of non-core business. Soon, we realized that our platform can also help businesses looking for more mainstream growth options such as raising investment, joint ventures and distribution partnerships, and so we widened our listing opportunities to include such growth options as well.

In this way, from a seller-centric platform we became a business matchmaking platform, and today we have listed over 5,500 buyers and investors, and 2,500 sellers and over 25,000 registered professionals are using our platform.

Even as we speak, we are reaping the benefits of evolving into a matchmaking platform. The matchmaking approach has shown its wonders with a considerable number of matches already being made – and what’s more – from among these matches, we have a closed a number of deals as well! Over the last few years, we have successfully closed multiple deals across several sectors such as Healthcare and Pharma, Education, IT and ITes, Manufacturing, and Financial Services.

More recently, we also filled a critical gap in the ecosystem by addressing the need for providing advisory support to both buyers and sellers. This has sparked our transition towards becoming an end-to-end deal-making platform where we extend expert transaction advisory services, dedicated attention of a deal associate, and high-involvement deal-making services such as negotiation, targeted scouting, and tapping into third party deal prospects.

We took this a step further by pioneering a novel deal-making event in India called the Business Buyer’s Club. It is our ambitious attempt to fast-track deal discovery by bringing together highly curated and credible prospects from both buy-side and sell-side. Handpicked businesses were showcased to a cohort of genuine buyers and investors in Mumbai and Ahmedabad, followed by networking and matchmaking that facilitated personal interaction between buyers, investors and business owners. We have received tremendous response from the event participants in Mumbai and Ahmedabad, and along the way we also joined hands with esteemed organizations FICCI and GCCI who shared a joint vision with us – and event outreach partners such as eChai, TiE and ah! Ventures. We are thankful for the enthusiastic support we have received from every corner and more events like these are definitely on the cards.

Even as we evolve and transform, our larger goals remain the same – we are here to make SME deal-making hassle-free, quick, and exciting, and have miles to go before we rest.

Due Diligence Before Buying a Business: What, When, Why and How

We often come across the term ‘due diligence’ in the context of buying, selling or investing in a business. Simply put, it is the investigation or in-depth analysis of a business in order to ascertain its true worth. We can compare it to the process of buying a property (e.g. a house) for ourselves. Before we buy a house, we check the location, try to determine whether the house is in good condition, check if there is any legal issue involved which may land us in trouble, and so on. Similarly, before you buy a business, conducting due diligence on that business is a must.

Now, let us try to understand due diligence better by considering the various important aspects of it.

What Are the Different Types of Due Diligence?

Business: Begin by evaluating the type and size of business and its nature of ownership. Evaluate the position of the business and its products and services with respect to the market, the profile of the seller, relationships with suppliers and other channel members, quality of the existing staff, status of existing leases (if any), and so on.

Financial: It is best to seek assistance of your accountant to evaluate the financial health of the business. Request audited financial statements of the business for at least the last three years and provisional financial statements for the ongoing year, if applicable. Assess the profitability, net worth, cost structure, debt equity allocation, asset utilization, current ratio and any major outstanding liabilities. Also, request financial projections for the next 3 5 years and ascertain the future potential of the business in an objective manner.

Technical: What are the core technology elements in the business? What is the efficiency of technology used in the business? Is it state-of-the-art and cost effective? Can it be easily extended to match with future technology? Are the licenses and patents in place for any technological innovation carried out by the business? Is there adequate infrastructure to support the current and future technology?

Legal: Look for any legal matters of concern, such as if the business has been served any legal notices and the present status of such notices, status of tax compliance of the business, any disputes on ownership of the business, any ongoing or past litigations, safety aspects of plant and factory, if any, and so on. You can further deepen your analysis specific to a particular business and get professional opinion from your legal advisor.

When Should You Conduct Due Diligence?

As a prospective buyer of business, you will come across a number of attractive business opportunities. The best time to conduct due diligence is after you have shortlisted your prospects to a maximum of 2 businesses, which match your criteria to the maximum possible extent. Once you are certain that the business seller is genuine and has a clear reason for selling the business, that there are no obvious red flags in the business as per your initial analysis, and that you are satisfied with the overall initial assessment of the business and its reputation, it is the perfect time to take the deal forward and conduct due diligence to investigate the business in depth.

Why Should You Conduct Due Diligence?

Due diligence on a prospective business is a must for buyers because –

  1. It helps them find out any issues or concerns with the business that can affect their purchase decision
  2. It helps them gather the inputs required to carry out an objective valuation of the business
  3. It is critical to manage future transition in a better and smoother way

How Should You Conduct Due Diligence?

The best way to conduct due diligence is to first have in place a cross-functional team consisting of an accountant, a lawyer, a tax advisor and a business analyst. Create a checklist of documents to be requested from the business owner and keep on tracking the receipt of such documents on a regular basis. As your team proceeds with the due diligence process, request them to keep a list of all the questions for which they need clarification, and share these with the seller periodically. Don’t leave anything for the last minute, keep addressing issues in a timely manner.

So, are you ready to buy a business soon? We have helped thousands of buyers and sellers discover their right match through our platform and have helped many of them close their deals successfully as well! To know more about what we do and how we can help you, please write to us at [email protected].

How to Prepare Your Business for Sale and Why You Should Start Now

As the owner of a small business, this might be the first time you are considering selling your business. It is natural for you to feel overwhelmed and wonder how to sell your small business. We have worked closely with thousands of business owners like you over the last few years, and understand where you are coming from. Serious business sellers often ask the question – How can I prepare my business for sale? Hence, we thought of sharing our experience in this article along with a few expert tips that can help you with sale preparation. 

Why Should You Prepare Your Business for Sale?

Preparation is an important step in the process of selling your business. The key benefit of sale preparation is that it helps you take stock of your business and review it with a fresh eye. Sometimes, as a business owner, you tend to get so involved in the day-to-day affairs of the business that you barely get time to take a hard look at how things stand, and consider things as objectively as possible. Sale preparation can help you do that.

Secondly, good sale preparation can help you create a great first impression on prospective buyers. Having your books of accounts in order, sorting your key business documents, reviewing your internal systems, and doing organizational improvements can go a long way in smoothening the sale journey for you. We have seen many situations where efforts made on sale preparation even led to better valuation – for example, a staffing solutions company spent a year on fixing its organization structure issues and eventually received a valuation that was very close to the owners’ asking price.

What Does the Process of Sale Preparation Entail?

While there are no hard-and-fast rules about how to prepare your business for sale, we advise that you take a methodical approach to it. You can start by getting together your key team members, preferably from different functional areas such as marketing, distribution, finance and accounts, product development, human resources and so on. Seek their objective view on how things stand and what you can do as a team to make things better.

If the exercise starts to get too overwhelming, take a time-based approach – what can you and your team do in the next 1 month? 3 months? 6 months? Who will be responsible for executing each of the key improvement areas? Who will they be accountable to? Keep an eye on the on-going affairs of the business too – this exercise should not disrupt your usual business as far as possible. Monitor the results of sale preparation periodically and make sure your team members take it seriously.

How Long Will It Take to Prepare Your Business for Sale?

The duration of sale preparation is again a matter of your judgment. Technically speaking, it is a function of two parameters:

a) How much improvement do you want to make in your business?

b) By when do you want to sell your business?

Goes without saying, the more improvements you want to make, the more time will be required. As an entrepreneur, it is important you distinguish the critical aspects from the less important ones. For example, having the books of accounts in shape is a top priority for most buyers.

Secondly, keep an eye on your timeline goals for selling your business. For example, if you must sell your business in a year, you cannot spend more than 6-8 months on preparing your business.

When Should You Start Preparing Your Business for Sale?

The answer is – now!

Yes, if you are seriously considering selling your business, you should start sale preparation right away. There is no good time to start. The earlier you start, the more prepared you will be at the time of handling buyer inquiries, and the more advantage you will have. You will also be able to take stock of things better and get an objective view of where your business stands as of now, and how much can be done in what time. The more you delay, the more you will lose out – one of the common mistakes that sellers make.

So, what are you waiting for? Now that you know how to prepare your business for sale, go for it! At IndiaBizForSale.com, we help thousands of business sellers make their businesses more saleable and connect with matching buyers quickly. To know more about what we do and how we can help you, write to us at [email protected].