Selling a percentage of your business is a significant decision that is taken due to different reasons like securing much-needed capital, funding expansion, or facilitating a partial exit. While this process can be time-consuming, it requires careful strategic planning and execution. To help you go through this complex procedure of partially selling a business, we’ve put together a step-by-step guide.
Why Consider Selling a Percentage of Your Business?
Here are some reasons to think about selling a portion of your business:
- Lighten Your Load
If you’re overwhelmed with responsibilities, selling part of your business can ease your workload and let you focus on key areas.
- Raise Funds
Selling a percentage can provide the capital you need for debt repayment or to explore new opportunities.
- Sharpen Focus
If certain parts of your business are thriving, you might choose to sell other areas to concentrate on what’s working best.
- Cut Losses
For sections of your business that aren’t performing well, a partial sale can help you move on and improve overall financial health.
- Protect Share Value
If your business is publicly traded, selling off parts gradually can help maintain shareholder confidence and keep your stock price stable.
Steps to Selling Part of Your Business
Understanding each and every step of the process of selling a part of your business is crucial to ensure you do not make any mistakes and face financial or legal challenges. Follow these steps to get started.
1. Decide How Much to Sell
The first step is to decide how much portion of your business you wish to sell. It can be any specific department like an underperforming portion, or you might want to sell some percentage (10%, 20%, etc.) to raise money for the company’s growth. Analyze your options carefully and determine the amount that you’re comfortable selling. Consider its overall impact on the whole business. This will help you make an informed decision and set a clear goal for the sale.
2. Value Your Business
Before you sell a business partially, you need to know how much the stake is worth. This will help you determine the fair value of your business portion.
3. Choose How to Sell
There are a few ways to sell a part of your business:
- Asset Sale: This means selling specific parts of your business, like land, equipment, or intellectual property. With an asset sale, you’ll lose control over what you sell, so think carefully about whether it’s worth it or if leasing might be a better option.
- Investors: You can invite investors to buy a stake in your business. However, wisely make up your mind for selling company shares or stake as it can surely give you an extra amount but may also reduce your control over the business.
- Management Buyout (MBO): The existing management team can buy a part of your business. This is a good option if you want to retire or sell a part of the business to those who already run it.
4. Find Buyers
Advertise your business on websites that list businesses for sale, in local publications, or on social media. You can also approach potential buyers directly. It’s smart to have a few potential buyers lined up in case some drop out. Be ready to negotiate, as buyers often want better prices or terms.
5. Consider Using a Broker
If you’re worried about selling on your own, a broker can help. They can help you find buyers, negotiate the price, and often get you the better deal. Brokers usually charge a percentage of the sale, but they can save you time and effort.
By following these steps, you’ll be well on your way to selling a part of your business effectively.
6. Seek Professional Financial Advice
Consult with financial advisors to ensure you understand the implications of the sale. They can provide expert advice on tax consequences, financial planning, and how to manage the proceeds effectively.
Conclusion
Selling a percentage of your business is a big step that requires careful planning. For expert help, turn to Cangaf Ltd.. They offer professional advice on valuing your business, finding buyers, and handling financial and tax matters. With their support, you can make the process smoother and achieve the best results.
More helpful links:
Contact Details:
CANGAF Accountants
235 Tonge Moor Road, Bolton BL2 2HR
Email: info@cangafltd.com
Phone: 01204 859315
Let CANGAF Accountants manage your finances while you focus on excelling on the pitch.
