Preparing To Sell Your Business
Business owners who have spent several years or decades building a profitable entity inevitably reach the point when it is time to exit. Whether for retirement, health concerns, moving, starting a new venture, there will likely come a time when you are ready to move on. And if you are not handing the business over to a close relative or friend, you will need to look at selling it to another party. This is where a business intermediary can help.
As business intermediaries, we talk a lot about exit planning steps to get the business ready for a sale. However, it is just as important for the owner to be prepared for this event. When you have put so much of your time, talent, and treasure into a business over the years, it is not always easy to leave it all behind. This can cause problems during the selling process; and at times, deals have been known to fall apart because the owner gets cold feet at the last minute. When this occurs, it is tough on all parties involved, and it makes it more difficult to attract serious buyers if you decide to put the business on the market again.
Before you put your business up for sale, make sure you are mentally and emotionally prepared, so you are ready and able to see the deal through to the end. Here are some areas to look at in examining your mental and emotional readiness:
Your Financial Picture: Are you in a financial position to sell your business? You may enjoy a comfortable lifestyle now, but do you have the financial wherewithal to maintain your current standard of living post-sale? On a related note, you should consider whether or not you are able and willing to (at least partially) finance the sale. Many buyers are looking for alternative financing options, so this question is likely to come up. You should also look at the tax implications of receiving a large lump sum vs. payments over an extended period of time. Before going any further, ensure that you are financially ready to make this leap.
Family Attitude: Is your family prepared for the sales process and eventual outcome? Have you asked them? This could be a more complicated question than you think especially if you have adult children or other relatives that are employed with the business. What are they going to do if you are no longer in charge? Sit down with your key family members and discuss their feelings about exiting the business.
Post-Sale Plans: What do you plan to do with yourself after the business is sold? Do you want to work in the business for a while before totally moving on? Many owners choose to do this if, for no other reason, to keep from becoming bored. Think carefully about what you plan to do after you no longer have a business to run. And if you do want to stay on with the business for a while, consider what it will be like with someone else as your boss.
Primary Selling Reason: You need to be able to clearly answer the question “why do you want to sell”? This is one of the most commonly asked questions by buyers, and your business broker will need to be able to give prospects a good reason. Take some time to seriously consider this question, and have a clear answer to give when you are ready to start the selling process.