Originally published, August 1, 2017

Congratulations! You've built a successful business and are ready to cash out. It can be tempting to rush into the selling process, but if you're looking to get the highest possible price you should take the time to develop a strategy.

Here are six tips from the Business Law team at EKB to help you maximize your sale price.

1. Start Early

If you know selling is on the table for you, start the planning process early. You want your business to be in good condition when you decide to sell it. This means making sure your records are in order, sothat they showcase the business in the best possible light. During the due diligence process, your company's records and performance will be under intense scrutiny from prospective buyers. You don't want disorganization and poor planning to decrease the amount a buyer is willing to pay or, worse, to cause buyers to lose interest altogether. Start the conversation with your lawyers and other advisors well before you need to sell and, ideally, well before you even want to sell. Doing an honest self-assessment early on will allow you the time to fix any problems or, at the very least, prepare explanations for potential buyers.

2. Find the Right Buyer(s)

One way to maximize the sale price of your business is to find the right buyer or, even better, the right group of buyers. In some cases, your personal network of contacts may include a good pool of potential buyers, such as competitors or your business's current management team. However, there may also be buyers outside of your own personal network, such as private equity firms, or perhaps even outside of your industry or geographic area that might be interested in your business. One way to broaden your marketing efforts is to hire a broker or investment banker to help solicit buyers and present your business in the best possible light. Brokers are often experienced in generating interest from multiple parties and designing a process aimed at encouraging multiple bids. Having the ability to walk away from one bidder to accept another bidder's higher offer is key to creating the competitive tension needed to drive up the ultimate selling price of your business.

3. Sell at the Right Time

This step goes hand in hand with the planning process. It probably goes without saying that people want to purchase a successful business. Therefore, if your ultimate goal is to sell your business, or you plan to retire in the next few years, seriously consider the right time to sell. To maximize your sale price, you will want to sell when the business is flourishing and dynamic, not when you have lost interest in running it and it is on the decline.

4. Consider Seller Financing

If you've done your homework on the buyer and believe they will be able to continue to run your business at a profit for the next few years, you may be able to negotiate a higher selling price by agreeing to seller financing. In a transaction with seller financing, the seller agrees to be paid out gradually for a portion of the business's sale price, usually from the business's profits. This means the buyer does not have to raise as much money up front to take over the business. This carries some risk for you as the seller, but is often very desirable to a buyer and may enable you to ultimately collect more money for your business.

5. Negotiate

Rarely is a potential buyer's first offer their best offer. Negotiating on price and other terms can be a time consuming, tedious and, for some, unpleasant process. But it is one that is essential to driving the best bargain. This is where leaning on your professional advisors to play "bad cop" and deal with some of the more mundane transaction terms can be beneficial.

6. Consult a Tax Expert

Being able to maximize the sale price of your business is great, but a lot of the money you receive may be owed to the government as taxes. Consulting a tax expert can help you retain a higher portion of the sale price by minimizing or deferring the amount of tax you will pay. When considering selling your business, you should make tax considerations a priority early on in the process. This should include considering the best structure for the transaction itself, in conjunction with looking at your personal tax planning and estate planning.

You've worked hard to build a successful business and you deserve to profit as much as possible from its sale. Taking a moment to prepare your business before hand, develop a strategy, and consult with experts will help you to obtain the maximum possible price. Our Business Law Team can help you to position your business for sale, choose the right financing options, and negotiate the best possible deal. To learn more  download our free guide for buying or selling a business.

6 Ways To Maximize The Sale Price Of Your Business

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.