You can sell shares of your company either to raise capital or to sell your business outright.
Shares represent ownership rights to a company. If you have an incorporated company (a firm that can issue shares), you may want to sell a part or all of its shares. You can do that either to raise capital for further development of your company or as a way to sell your company outright. You can sell your company's shares to a wide range of investors: venture capital firms, angel investors, institutional or retail investors, or competitors.
Instructions
1. Prepare a valuation report on your business, so that you will know how much the shares of your company are worth. You can value your company by comparing how much firms that are similar to your company are worth. There can be public equivalents of your company whose share prices are known, or there may have been announcements of acquisitions of similar companies. In any case, do the research and come up with a valuation range of how much your business is worth.
2. Explore different options for selling your shares. Much will depend on the size of your business: If you have a start-up company, probably the best option for you will be angel investors or venture capital firms. Angel investors are interested in providing seed capital to young, promising companies but with reasons other than getting a financial return. An angel investor may be lured by a specific cause your business is advancing (e.g., green technologies) or may buy your shares just to try to "give something back" to the community in which he grew up.
Venture capital firms are more concerned with returns but are no less good investors. They will not only provide capital for your business but can also make changes to how it is run, making management processes and controls more efficient. You can find a list of venture capital firms and angel investors at Entrepreneur.com, vFinance.com or similar websites. You can also check local business schools, as they often work with local angel investors and venture capital firms, and could provide you with the information on get in touch with them.
If your company is an established player, you can sell its shares through private placements or by getting a public listing of your company on an organized stock exchange such as the New York Stock Exchange (NYSE). This is a fairly complex process, and you should seek the help of an investment bank to do that.
3. Approach potential investors you have identified and sell the shares to the highest bidder. Whatever option you choose for selling your shares, you probably will have a number of investors to select from. Do not go for the first offer, but always try to negotiate a higher price. Do not sell your shares below what you estimated they are worth when you conducted a valuation for your company. If no reasonable price appears, you may be trying to sell in a bad market; therefore, postponing your sale of shares to a later period may make sense for you.
