How to Sell Your Business by Auction

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Selling a business by auction refers to selling it through a bidding process. The person with the highest bid is given the first priority in purchasing the business. Auctioning a business increases the competitiveness of the buyers involved because none of the potential buyers wants to lose out to the competition. The following are guidelines on how to effectively auction a business.


    • 1

      Communicate effectively with stakeholders the reasons why the business will be sold. Do not leave it until the last minute to surprise stakeholders with an auction deal that they are unaware of. Effective communication includes making a case for why someone should buy it. Highlight key achievements and the growth the business has achieved to potential buyers.

    • 2

      Form a dedicated internal team to oversee the auction process. The team should comprise of key staff from various departments who are in a position to make a good case for the organization. This ensures that the business gets good value for its assets and operations. By creating a dedicated team, you can assure all employees to continue with their work while the business is being auctioned. Financial records must be up to date and the premises in top condition to interest potential buyers.

    • 3

      Identify a suitable investment bank to handle the auction, seeking out key individuals within the bank who have a proven track record in closing sales. Valuations are driven by profits; get the investment bank to prepare growth projections that support your business' potential.

    • 4

      Negotiate on behalf of employees, so that they will be treated fairly by the new owners. Employees are the most important asset of any business, a point you can stress with the new owner to ensure that your workers are protected.

    • 5

      Weigh the bids received and with the help of your investment bank, identify the best deal and seal it by fill out the requisite documentation and legal forms such as the Asset Acquisition Statement, Form 8594, required by the IRS.

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