Making your business look as attractive as possible allows you to get the best price and can speed up the sale. That’s why we have created this quick article to guide you through the process of selling your business and how edenX can help.
We have broken down the process into the following 4 stages: Prepare, Connect, Negotiate and Close.
Stage 1 – Prepare
The first step to selling your business is to ensure that all your company documents are up to date and you have them to hand. These will need to be provided to anyone who is interested in investing or buying your business and can be used to create your company’s profile in edenX. Although not strictly necessary, an investor presentation can elevate the impact of your business by including marketing material to showcase your offerings while also covering key business metrics. An investor presentation will also contain industry analysis to help buyers understand the environment your business operates in.
Another key part of the preparation is determining the value of your business so that you can price it appropriately. There can be many ways to value your business and we suggest your explore them all. Our partners at edenX are specialists in this field and can create a valuation report for you. This may come in handy later at the negotiation stage.
Timing of the sale is also crucial and will depend on your goals. Perhaps you are looking to retire, have become bored with the business or looking for a partner to take it to the next level. Any of these can affect your timelines. You might also want to consider the overall economic environment; simply put, is it a good time to sell your business?
You might then ask yourself “should I use an adviser to help me sell my business?”. An adviser typically helps you find a buyer, helps to present your business in the best light and then helps with the negotiations, especially when the lawyers get involved. You need to consider this question along with the costs involved because advisers can charge up to 10% of the transaction amount.
Stage 2 – Connect
Selling your business may take anywhere between 6 months to 2 years and finding the right buyer can be a challenge. To speed up the process and improve your chances of finding the right buyer, we have developed a matchmaking engine using enhanced AI technology. All the buyers on edenX enter details about what types of businesses they want to buy or invest in (sometimes called a mandate) and this is compared to the profile you created for your company in edenX.
In edenX, before an interested party gets access to your company’s details (including your name), you have to give your consent. This allows you to stay in control of your data. edenX includes a secure messaging facility so you can even communicate anonymously with buyers before giving your consent.
Stage 3 – Negotiate
When a buyer is serious about buying or investing in your business and wants to learn more about you, they may make a non-binding offer (NBO) which includes a preliminary indicative amount they may be willing to pay. It’s important to have thoroughly prepared for this stage and this is where a valuation report can help better position you for negotiations.
It’s at this stage that the detailed due diligence starts and the buyer requests more details about the operation of your business. They may request exclusivity for a limited time to undertake this process. Their appointed accountants and lawyers will study your accounts and contracts to ensure there are no skeletons in the cupboard and validate that how you have presented your business is accurate.
Stage 4 – Close
After concluding your negotiations with the buyer, the execution of a sale and purchase agreement would close the deal. This agreement describes the detailed terms and conditions for the sale and purchase of the business. After this, sale of a business is likely to involve other transfer shares and execution formalities.
If you have any unanswered questions then please check our FAQ page. If you can’t find an answer to your question then please contact us.
