Selling your business is a natural part in the life cycle of any business and it is the most common exit strategy for owners. Naturally, you want to get the most value possible. Planning in advance is key to a successful and profitable sale.

Here are some questions to consider before you decide to sell your business. How are you going to ensure business continuity? Is there anything that will interfere or delay the sale? How are you going to assess the value of the business and improve financial results? How will you get a buyer?

You want to make sure the business can be transferred to a buyer and that the buyer will also realize a profit when operating the business. This is especially important if you're selling to a family member. A good starting point is to review and analyze your company's material contracts, licenses and permits. If you have key relationships with certain customers or vendors, try to solidify these relationships with multi-year contracts that renew automatically. Thus, your buyer has a base of business that he can grow and develop.

Two huge problems in selling your business are ongoing litigation and business partners who disagree on the exit strategy. A current lawsuit or a potential lawsuit will scare off a potential buyer. If the buyer is willing to take the risk with a pending lawsuit he will probably demand a significant discount or require a part of the purchase price be held by a disinterested third party until the litigation is complete. Therefore, it is best to settle or resolve any lawsuit prior to putting the business up for sale.

You may be ready to sell, but your business partners don't want to sell at all or everyone cannot agree on a selling price. If your business is a corporation and you do not have a shareholders agreement, the default rule in Louisiana is that a sale of substantially all of a corporation's assets or engaging in a merger requires the approval of two-thirds of the shareholders at a duly called shareholders' meeting. If your business is a Limited Liability Company (LLC) and you do not have an operating agreement, the default rule in Louisiana is that a sale of substantially all of the company's assets or engaging in a merger requires the approval of a majority of its members.

It is highly recommended that every business have an exit strategy well defined within it's operating agreement, shareholders' agreement or other document appropriate for your business entity. If you do not have such a document, it is best to have one prepared by a seasoned professional prior to attempting to sell your business. Getting everyone to agree well in advance (years) is vital to the successful sale of your business.

How do you decide on a selling price? Often business owners think their business is worth more that a buyer is willing to pay. Getting a professional to evaluate your business and review recent sales of businesses similar to yours will be helpful in deciding on a price. A CPA or business broker will be able to help you with valuing your business. A review of recent similar sales will help you understand what the market is really willing to pay for your business. Who will be your buyer? The best way to increase the value you receive for your business is to sell it to a strategic buyer, such as a competitor, vendor or customer. These buyers will be able to leverage some of their existing business to increase their profit from the newly acquired business more than an unrelated third party. So look to your competitors, vendors, and customers first when trying to sell your business.

In conclusion, selling your business requires advance planning. Even if you are years away from exiting, it is best to start thinking now about how you will exit your business and begin making the necessary plans to ensure a successful transition.

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