Do you have a business exit strategy? Developing an exit strategy or succession plan is essential in smoothly transitioning your business and ensuring you maximize your opportunity to profit from the sale. SCORE offers tips on when to begin planning an exit
and how to complete a valuation of your business
. The SBA also offers great information on creating a sales agreement.
Closing your business involves a number of steps including financial ramifications, tax issues and relationships with employees, customers and suppliers.
Process of an Exit:
1. Determine Your Reason For Selling
: A buyer will ask this immediately.
Timing can be everything from finding a buyer to maximizing your sale price
Valuing your business for sale is both an art and a science. There are various methods for determining a value. Like anything else, you’ll also need to take into account what demand there is for your business, what you need to get out of it, and what a potential buyer is willing to offer.
4. Third Party Assistance:
Business brokers and websites are two means for hiring an agent to work on your behalf to find a buyer. The alternative is to sell the business yourself. As with anything, there are pros and cons to each.
5. Document Prep:
Buyers will want to see financial documents related to the business. They may want to talk to key clients or employees as well. They will want to do as much due diligence as possible, so be prepared.
6. Marketing Your Business
: The broader you can market your business, the more demand, and hopefully increased pricing, you can extract from the sale. Create lists of potential buyers and start marketing to them!
State of Iowa Requirements
However you choose to exit your business, you will need to complete appropriate steps with the state of Iowa.
If you're selling to a key employee or other outside party, it's recommended that you meet with a professional business broker, attorney, or with an Iowa Small Business Development Center consultant.
Iowa is also one of only a few states that has an employee stock ownership plan
with financial incentives for businesses looking for succession options.
For other questions you may have, please call us toll free at 866-537-6052 to get in touch with the Iowa Business Concierge.