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Sale Process
Definition - What does Sale Process mean?
Vincent Murphy Business Broker |
Oscar Business
Vincent D Murphy Business Broker IBBA |
A sale process is conducted by a business broker or investment banker when they are engaged in a sell-side assignment. The sales process is a systematic approach to selling a business, and its primary purpose is to find the most effective way to meet the pre-determined objectives of the seller.
The following types of sale processes can be employed depending on the objectives of the seller:
- Full auction process - approaching all potential buyers in the market;
- Limited competitive auction process - approaching a few logical best buyers; and
- Negotiated the sale process - negotiating a transaction with only one party.
Divestopedia explains Sale Process
A company owner must weigh the following objectives when determining which sale process is most appropriate:
- Keeping the sale of the business confidential from competitors, customers, and employees;
- Maximizing the potential sale proceeds; and
- Finding the right buyers for the business.
- Analyze and value the company - set the price expectations and understand the seller's objectives;
- Develop the marketing material - prepare a confidential information memorandum and a list of potential buyers;
- Approach potential buyers - manage the flow of information and qualify the buyers. In a full or limited competitive auction, creating competitive bidding is essential;
- Evaluate offers - assess each buyers' price, structure, conditions and financial capability to close the transaction; and
- Execute the transaction - manage the due diligence and finalization of a purchase and sale agreement.
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