Commercial Real Estate Selling: 6 Tips and Tricks
The time has come; you are now ready to sell your business. Be bold and confident, you are not alone in this.
In the year 2018, close to 10,312 businesses were sold for different reasons.
Planning how to sell a business is not a simple step, especially when you aren’t conversant with the steps.
To make the process simple and profitable, we greatly recommend that you consult a realtor experienced in commercial real estate selling. Ensure you talk to the realtor earlier, as having time on your side will allow you to prepare adequately.
Here are 6 tips and tricks the realtor might suggest to close the sale fast.
1. Get Organized
To ensure your business sale will go through fast, start by getting your financials in order. Prepare financial statements for the current financial year and projections on what you expect in the coming years.
Also, clean up any QuickBooks and develop key evaluation metrics for your industry. In other words, understand your numbers.
This is important considering buyers start by asking what the business’s financial position is and whether there are outstanding liabilities. Your answers to these questions will either lure or deprecate potential investors. It’s even worse when you don’t understand the numbers.
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Other records to set straight include the relative size of your customer base and relative growth of the business in net income and gross sale for the past two to three years. The list is quite long, and that’s why you should start preparing early. Preparing early will offer you time to make adjustments accordingly.
For example, if you are heavy on debt, you can use cash to pay off the debts. Moreover, you can use available cash to buy minor shareholders or refinance.
2. Gather a Team of Advisors
When selling a business, a realtor might not be enough. Instead, gather a team of trusted advisors to help you make smart choices.
Here’s why; there is a high chance you have never sold a business before, and you only have one shot at getting this right. Don’t risk everything; gather a team of personal and business advisors.
Ensure your team consists of Brisbane quantity surveyors and tax advisor, valuation expert, business broker, and transaction attorney for a business advisor. On the personal side, an estate planning lawyer, a tax and financial advisor should be actively involved in the entire process.
There are plenty of decisions to make, like approaches to preserve key employees and the deal’s structure to adopt. Making all these decisions can be overwhelming, and that’s why you require a team of specialists to help you weigh available options.
3. Determine Your Business Worth
Work with the valuation expert and business broker on your team to determine the real value of your business in the market. After evaluation, hold a meeting with the business broker to ask how much buyers are willing to pay for your business.
Also, it’s worth exploring estimated value under varying sale structures. For instance, evaluating your business worth using the employee stock ownership plan might prove different than if you sold to a competitor. Also, selling non-controlling shares is likely to attract less than full acquisition.
With this in mind, ensure you and your advisory team opt for the best approach when selling the business. It’s also vital to check how the deal structure will affect the evaluation.
4. Define Your Goals
Once you are done evaluating your business worth and now exploring ways to sell the business, take time to define your goals. Consider whether you want to sell the whole business and walk away with the cash or sell a portion of the company.
There are numerous methods for selling your business, and with clear goals, it’s easy to decide on the most favorable of them all. To save time, eliminate all options that don’t match your financial goals.
So, don’t get wooed by deal structures that aim at tax minimization if they don’t align with your goals. Taking to your financial advisor about your plans after the sale and income needs will help you determine how much cash you need.
The advisor might advocate for or against an installment sale depending on your needs.
5. Don’t Neglect Your Company During the Sale
One of the biggest mistakes you can make is neglecting your business during the sale process. You should take care of your business until the deal is done, and both parties sign the agreement.
Normally, it takes 4-6 months to close the deal. During this period, a lot can go wrong if you don’t operate the business well.
A sudden decline in your company’s revenue during the months leading up to the sale could be the onset of trouble. The truth is, no one will be willing to invest in a firm that is performing poorly.
With this in mind, ensure you hit revenue projections and other key metrics indicated in your financial records. Also, to maintain your business culture intact and employees motivated, have potential buyers sign a non-disclosure agreement.
Small business succession planning could also be a life savior. Start delegating tasks to potential employees to start preparing them for the transition.
6. Have a Plan After the Sale
Once the sale is done, you will need a plan on how to use the money. Irrespective of whether you want to start another business or fully retire, have a plan to maximize the value of the award.
The best decision you can make is to diversify your investments. Take time to identify opportunities and understands the risks involved. Seek advice from your financial advisor for the best outcome.
Follow Our Guide for Fast Commercial Real Estate Selling
Deciding when to sell a business and the right way to sell a business is never easy. However, with the right preparation and counsel, you should proceed fine.
Commercial real estate selling is similar to selling a business, and therefore seeking counsel from a realtor might be a smart move. Realtors have connections to investors who might turn to potential buyers real quick.
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