Selling a business is a process, followed with milestones. There is a lot that goes into selling a business and to some it can be overwhelming and exhaustive process. Let’s discuss what the distinct steps are in selling a business.
First and foremost, you need to create a Confidential Information Memorandum, short for CIM. This CIM will outline what your business is about, what does your business do, operational and management of the business. You should also include the SWOT analysis along with high level financials of the business. Stating the asking price and what the Cashflow/EBITDA for the business is also a great idea. Ideally you should hire a technical writer to do this for you, as errors and mistakes will put off the prospective buyer.
After that you need to craft a Non-Disclosure Agreement, short for NDA. You want to make sure that all the buyers interested in receiving the CIM of the business signs this NDA to keep everything confidential. With the CIM and NDA in place, you will go to market and start advertising your business. When you get buyer inquiries, you will send them the NDA to sign and after signing, you will have to send them the CIM.
This process continues until a(n) buyer requests a call to get more info or submits an LOI, which is Letter Of Intent. After you accept the LOI, the buyer will conduct their due diligence, after successfully completing the due diligence the attorneys will be engaged to draft a purchase agreement, followed with the closing. Sounds easy right, but not quite – there are multiple things that can go wrong during this process.
These are just very high level distinct steps in selling a business. We at GillAgency have written an extensive article outlining a 10-stage process which you are welcome to browse at https://gillagency.co/our-process