The world of IT and high tech offers many exit opportunities for business owners. In this strong economy, and with the large number of baby boomer owners, this is an ideal time for the owner of a thriving tech company to consider the options and advantages of selling a business to a waiting buyer.
But there are a few stops along that road between the first thought, “I think I might sell my business” to the point when you turn over the keys to the new owners.
If you are thinking of exiting the business, the first step you should take is to determine the market value of your business. The services of a professional business valuation expert, a business broker or a CPA can be invaluable in this initial task. It can be argued that a strong and thriving IT firm is an attractive opportunity for someone seeking to buy, but there are any number of factors which can help shape the value of the business.
Some may include:
- Does the business have contracts with its clients?
- Is the management and tech team likely to remain with the team with the new owners?
- How profitable is the company?
- What assets go with the sale? Is there real estate? Does the company own any proprietary software?
- Is the business located in a strong market?
Business valuation experts will advise a potential seller of the realistic market value of the business. Determining the value of a business is a combination of art and science, and there are several methods which an expert could use. There are also a wide variety of factors that the expert will need to consider during the process, because every business is unique. In other words, it makes sense to seek the advice of a valuation expert in getting started.
After determining value, a next step is to determine how to find an appropriate buyer. The services of a reputable broker can be of great value in bringing buyers and sellers together. In a future blog, we can look at some of the legal issues surrounding the sales process: what to do after engaging a broker, what a letter of intent and purchase and sale agreement look like, what they should contain, and how to navigate through the transaction.