How to Sell Your Business

Selling a business is more complicated than merely coming up with a price and finding a buyer. It requires careful planning and the right timing, and if you want everything to go well, the sale needs to be executed meticulously.

There are many different reasons you may choose to sell your company. Whether you’re looking to move on to a new professional venture or you’re preparing for retirement, getting your business ready for sale can help you increase its value and ensure a smooth transition for both you as the owner and whoever it is that ends up buying it.

Business Sales in Different Regions

Selling a business is different depending on where in the world you’re located. Different countries have their own tax, regulations and labour laws, among other things, that influence the sale process and how it needs to be executed, including financials, dealing with employees and managing ownership.

These differences occur as a result of differences in market priorities, legal frameworks and economic policies of different regions, all of which influence requirements and conditions for both buyers and sellers.

Having a thorough understanding of these differences and protocols is an absolutely essential part of ensuring that business sales are smooth and compliant.

Legal and Regulatory Framework

No matter where in the world you’re based, your company will be subject to laws and regulations that will dictate what you can, can’t and ought to do when it comes to managing sales.

Some regions implement very strict controls over business sales, ensuring that every step is monitored and overseen. Meanwhile, other regions allow for business owners and potential buyers to use their discretion a bit more, imposing fewer documentation requirements and providing a bit more flexibility.

Labour and Employment Laws

One of the most important factors to consider during a business sale is the employees of the company in question, and labour and employment laws regarding this differ from one country and region to the next.

In some areas, employees are highly protected by labour laws that dictate what has to happen to staff with regard to the continuation of their contracts, while other places allow for this to be decided on more of a case-to-case basis. This includes issues pertaining to notice and severance pay.

Regulations Regarding Foreign Investment 

Some industries impose their own regulations that have to be followed during the sales process, and this has to do with environmental issues.

Tax Implications

Many countries around the world impose various types of tax on business sales and related transactions, however, different areas have varying rules on the kind of tax, the rate and more.

The main types of tax that you may be subject to include capital gains tax, VAT and sales tax, depending on where in the world you’re based. Furthermore, if you’re dealing with a foreign buyer, it’s likely that there will be even more considerations regarding tax that need to be taken into account.

Privacy Laws and Data Protection

Privacy laws are a really important consideration when dealing with business matters, especially in terms of the transfer of ownership. In the EU, for instance, there are very strict requirements for transferring employee and customer data during a business sale, and countries like Canada and Brazil are fairly similar in this regard.

In the US, on the other hand, data protection laws are different depending on the state you’re in, some of which are very strict and others are a little more flexible.

Whatever the regulations are, however, it’s really important that they’re understood and adhered to, otherwise both buyers and sellers may be at risk of serious penalties, both financial and otherwise.

Intellectual Property 

Intellectual property (IP) rights aren’t strict absolutely everywhere you go, but different countries tend to have their own IP transfer laws.

A How-To Guide for Selling Your Business 

While the specific conditions, requirements and regulations for selling a business differs depending on where in the world your business is based, there are some things you’re pretty much always going to need to consider and deal with.

Assess Your Reason for Selling

This may seem obvious, but before you do anything, you need to properly consider exactly why you’re selling your business – not only for your own personal purposes, but for the sake of the success of the sale too.

Buyers are guaranteed to ask – as they should – and the more clear and transparent your answer, the more trust you’ll be able to build with potential buyers.

There are plenty of reasons why you may choose to sell your business, but the most common include:

• Retirement
• Pursing other opportunities
• Financial reasons

…and more. A lot of the time, your reason for selling isn’t irrelevant to the actual sale either – it may very well influence not only who buys your company but whether or not the sale ends up being successful.

Have Your Business Valuated

Getting a solid valuation of your business is important for both you and potential buyers as it sets realistic expectations regarding the asking price for everyone involved.

A professional business valuation will take into account all aspects of the company, providing an objective measure based on income, market conditions, assets and industry trends.

To do this, you can choose to work with a certified appraiser, a broker or an account. Doing this properly will help you ensure that the company is neither undervalued nor overvalued, putting you in a good position to negotiate price and sale conditions with potential buyers.

Prepare Your Financials

If you want to sell your business, buyers need to be able to see that the company is in a good position – that is, that it’s attractive, and there are several different aspects to getting your financial affairs in order. Namely, the logistics of organising your actual financial statements and records; removing all records of your personal expenses that are mixed up in there; and reviewing any and all outstanding debt and liabilities.

These things will affect both your personal financial position, but it’ll also impact the sale price of your company. If you do things properly, you’ll be able to provide transparency and instil confidence in buyers. On a practical level, it’ll help ensure that the due diligence process is quick and painless.

Streamline Business Operations

One of the most important things to get sorted out before you’re ready to sell your business is to ensure that the company can function properly without intervention from you as the owner.

All operations need to be streamlined and to do that, you’ll need to consider creating documentation about processes and daily operations, assess key personnel within the company and identify opportunities for professional growth.

If you manage to get all these things in order, potential buyers are far more likely to be interested in your company and feel confident that it’ll continue to function optimally without your involvement and intervention.

Market Your Business

Marketing a business for sale isn’t as simple as marketing a product – it’s actually a pretty delicate process, as you need to balance the “advertising” process with the confidentiality of the sale to avoid alarming clients and employees.

A few ways to get this right include listing with a business broker who will be able to tap into the right networks; advertise anonymously via online platforms; or reach out to very specific industry contacts under the guise of confidentiality agreements.

Evaluate Potential Buyers

For most business owners, selling to somebody who you have confidence in is a really big part of the process – you want someone who will continue to help the company prosper while respecting the business’s legacy and looking after your employees and clients.

Some of the most important things to evaluate in terms of potential buyers include financial means, industry knowledge and long-term commitment to the business. It’s not uncommon for business people to have a look around without actually being totally serious about potentially making a purchase.

While this isn’t necessarily harmful, you’ll want to be able to discern the difference between someone who’s serious and someone who’s not.

Negotiate and Agree On Terms of Sale

The terms of business sales involve price, on the one hand, but there’s so much more to it. You’ll need to consider and agree on the structure of payment, all company assets and liabilities and sometimes even the possibility of a non-compete agreement (normally requested by the buyer).

Pay the Relevant Taxes

Different countries require sellers to pay varying types of taxes depending on the success of the sale and how much profit is made. Capital gains tax (CGT), for instance, is imposed on the seller depending on how much money they make during the sales process.

Transition Ownership 

The actual transition of ownership is about managing paperwork, creating a timeline for the shift of responsibilities (and daily operations), transfers of finances and more. Every single aspect of the transition needs to be discussed and agreed upon in a great deal and from there, it needs to be confirmed on paper.