April 23, 2015

Steps to selling your salon or spa business

When the time has come to sell your salon or spa business there are many factors to consider and the steps are important to be performed correctly to insure highest returns.

The first step is to take your time--selling a salon or spa business is a complex process and you will only do it once. Confidentiality is a necessity at this point, as word of an impending sale can cause repercussions among employees, clients and suppliers.

Your ownership position in the salon or spa business is a major point to consider. If you are the sole proprietor, the decision is yours alone. However, if you are a partner, selling your part of the salon or spa will involve more considerations. You may consider selling your part of the salon or spa to the other partners or a long term employee.

If you don’t want to or cant sell your part of the salon or spa to another partner or employee you should consider finding a good broker. Take your time to locate one you are comfortable with. Check the Better Business Bureau for any investigation history, and get referrals from fellow business owners or from industry associations like the International Business Brokers Association (IBBA).

A professional appraiser should be consulted, as just like selling a home; a professional appraisal will give a fair value to begin negotiations with. Use the financial statements in Advantage Salon Software and Spa Software in your business appraisal. Determining major terms and price are issues that you are going to have to work out with your broker, but a few basic factors come into play: what do you want to get out of the sale. Lump sum, terms, or stock options are some of the terms you may consider.

Once you and your broker have located a buyer and agreed on a price, a Letter of Intent is drafted. This letter outlines the terms and tentative price in a non-binding document and allows the buyer time to thoroughly investigate the spa or salon business. This process is subject to Due Diligence, as the onus of discovery is placed upon the buyer and buyer's agent.

After the discovery process is completed to both parties' satisfaction, the Purchase Agreement is drafted. This set of paperwork creates a formal agreement between buyer and seller regarding purchase price, terms, and other legal details. Once the respective lawyers have finalized the details and complied with state law requirements regarding the sale, the Purchase Agreement is signed, closing documents finalized, and the sale is complete.