The following information provides some pragmatic considerations that should be thought of before putting your privately-held company up for sale.

Consider if you want to work for a new boss
In most cases, owners cannot just walk away after a sale as the new owner would expect the owner to help transition employees and customers. Owner entrepreneurs need to mentally prepare for the reality of working for a new boss during the transition period that could last months or even years.

If other shareholders are involved, engage them in discussions
before putting the company on the market.

Obvious as it might seem, make sure that a majority of the ownership is behind the sale, and agree before-hand on a valuation range. Delicate as these discussions might be, they are better held before the business is offered for sale.

Prepare financial statements to accurately reflect the business
Financial statements of privately-held companies are typically prepared with a view towards minimizing taxes rather than maximizing earnings. Also, buried in the financial statements are owner perks. Both of these issues must be addressed and a set of credible financial statements that accurately reflect the condition and performance of the business may have to be prepared.

Develop a post-sale organization plan
If the owner-manager is departing after the sale, the buyer is likely to want a strong management team to be put in place to effectively run the business after the owner leaves. Owners need to identify the new management team and empower it in order to be able to demonstrate that the new team is capable of running the show.

Know your competition
An owner should be able to answer the following questions: Who are your competitors? What sets you apart from the competition? What is your market share and is it increasing or decreasing? Why?

Know your market
An owner needs to be able to answer the question: Why should someone invest in a company in this region? What is the outlook for the industry in the region?

Identify Company Strengths and Weaknesses
A thorough analysis of your company’s financial condition, sales and profitability trends, capital requirements, working capital and financing needs compared to industry peers can help determine what is a reasonable asking price. Identifying weak spots allows you to determine what steps to take to improve and maximize value prior to putting the company up for sale.