Are you keen to find out how to go about selling an IT business?
You’re in the right place.
There are many factors to determine when considering the sale of an IT or data business. From deciding the value of the business to determining the best business broker to hire, every detail of the selling process must be examined to ensure that the transition is smooth and produces a maximum profit for its seller.
To find the best solution to selling your IT business, follow these four simple steps below.
1. Determine the Reason for Selling the Data Business
When selling a data business, the first step is figuring out the reason for the sale. After owning a business and investing time and money into it, why must it be sold?
- Is it due to a lack of profit?
- Are you looking to retire?
- Has your familial circumustances changed?
- Does the company require too much time to manage?
It is best to have clear answers for buyers looking to purchase the IT business. It is also important as a seller to understand your reasoning for selling to set appropriate goals for the sale and find the right buyer to inherit the data.
Some common reasons for selling a business include, but are not limited to, retirement, illness or death, partnership disagreements, and becoming overworked.
Owners also consider letting a business go when it struggles to produce profit. Lack of return, however, can decrease the value of a company, making it less marketable to potential buyers.
Therefore, when considering the reason for selling the business, make sure to also take into account the timing and the business’s marketability. It can be beneficial to first make effort to increase profits, document consistent income figures, strengthen the customer base, or gain a contract to fund the IT business for years.
Doing these tasks will entice buyers, ensuring that the IT business will sell sooner rather than later.
2. Consider the Timing of the Sale
As mentioned previously, consider the timing of the sale.
If you are planning on selling the information technology business, the moment the idea comes about, begin to curate the sellable attributes as soon as possible.
The earlier you start your preparations to sell, the more time you’ll have to improve the financial health, structure, and customer base of the company. This will in turn strengthen the business, making it more profitable and marketable to potential buyers.
These improvements will also create ease when the new owners take over the information technology business.
3. Determine the Value of The Data Business
One of the most important factors to consider when selling an IT or data business is how much it is worth.
Once you begin preparing the company for buyers to purchase, consider its profit, age, and customer base. Its brand, however, can also be a selling point, however it’s not always a strong one considering it can change during restructuring.
A simple way to determine the price of an IT business is by hiring an appraiser to carry out a business valuation.
This valuation will increase the credibility of the sale, making the company more marketable to buyers and making buyers less likely to fight against the asking price.
4. Hire a Business Broker to Facilitate the M&A
Another factor when selling your data and IT business is to think about whether or not to hire a business broker.
Unless you’re familiar with complex legislation regarding the selling of businesses, state company tax requirements, and other finer details governing M&A, it’s best to hire a business broker.
Brokers will handle the troubles that can arise when selling the information business. Delegating to an experienced team with expertise in marketing, negotiation and familiar with the selling process will reduce your stress and give you peace of mind.
Working with a broker also frees up your time to focus on the operations of the business. With some freedom, you can turn your attention to improving operations and do all you can to increase the business’ appeal.
As long as the owner of the information business keeps open communication, the broker will facilitate negotiations, draft documents, and find buyers for the business. The benefits of hiring a business broker outweigh the extra expense.
The Bottom Line
Between the preparation of the business, determining its value, hiring the right business broker, and finding a buyer, the process of selling a technology or information business can become convoluted quite fast.
To add on, once you’ve determined the value of the business, you’ll need to compile at least three buyers, so in case the first deal falls through, there will be other potential buyers to purchase the IT business.
It’s clear that although selling a business can be time-consuming and difficult, having an outline simplifies the offloading process. However, nothing trumps working with a seasoned business broker. Our team at Sun Acquisitions can help. Contact us to see how we can assist you to streamline the selling process.
Looking for more insight on selling a business? Check out these links:
- Mitigating Post-Closing Risks Through The Rep and Warranty Insurance
- How to Navigate a Buyer or Seller’s Initial Meeting
- Are You Financially Ready to Sell?
- Buyer Motivation – How to Confirm?
- Sell NOW – The Crystal Ball is Pretty Clear
Disclaimer: Any information provided in this blog is not intended to replace legal, financial, or taxation advice given by qualified professionals.