As a business owner, you make a considerable time and financial commitment to your endeavor. Avoiding costly errors that could put the sale of your business in jeopardy and negatively impact your profitability is essential.

This article will explore an actual instance of a business owner making a mistake and offer insightful tips on how to structure a deal successfully and increase your profits.

The Example of Sam's Mistake

After years of arduous work, Sam V., a prosperous businessman, sold his company. He did, however, run into an unforeseen problem during the closing procedure that might have cost him dearly. Sam was notified by the closing attorney that he had gotten a loan to purchase the building for his company. Sam did not expect to pay off the loan in full on the closing day since he intended to keep the building for himself. The lawyer did learn, though, that the loan payment was accelerated in the event of a change in tenancy, thus Sam was required to settle the outstanding loan balance on the closing day. Sam gained excellent insight into the significance of anticipating every scenario before closing a deal.

Lessons Learned: How to Close a Trade and Make a Profit

You have to comprehend the elements that influence the sum of money you will receive once the agreement is completed if you want to maximize your profits while selling a firm. The sale price, account balances, accounts receivable, loans, deposits to suppliers, and prospective legal settlements are some of these variables. 

To prevent costly errors like Sam's, you need to make sure that all accounting is accurate, especially when it comes to contracts. Even though having a contract register is essential, just 10% of businesses now do. You can make sure that there is adequate profit to pay off all debts by clearly comprehending the accounting of contracts. 

Before listing your business for sale, make sure that all documentation is drawn up correctly. This includes loans, advances, and any other relevant financial agreements. You should also consider working with a broker who can provide valuable advice and connect you with specialists who can assist you throughout the process. Read our article on how to structure a deal correctly to understand the future process.

When you receive an offer, it is essential to calculate your BATNA (best alternative to a negotiated agreement) before responding. This will help you make informed decisions and negotiate from a position of strength.

A business broker is your first advisor in this regard. He can advise specialists who can help you every step of the way. Learn more about the participation of a broker in the sale of a business here.

Important steps to do before selling a business:

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  • Assess your business correctly so that there is enough profit to cover all debts.
  • Before listing a business for sale, make sure that all documentation regarding the accounting of contracts (loans, advances, etc.) is drawn up correctly.
  • Contact your broker in order not to get into an unpleasant situation.
  • To make a business attractive to investors, read our article.
  • Put in order all the accounting, especially in the field of accounting for contracts.
  • Create the correct profit expectation by reading "The Business Immigration Process" book.
  • Calculate your BATNA before reacting to an offer.

Selling a business can be a complex and challenging process, but it is also an opportunity to maximize your profits and move on to new ventures. By avoiding costly mistakes like Sam's and following best practices, you can ensure a successful sale and a bright future. 

Read What Our Clients Say (Google Reviews)

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