The most difficult decision a business owner will make is the decision to sell their business. Very likely, the owner started the family and invested countless hours of his or her life into the business. Selling is akin to giving away your child – for many there is no way to place a value on what its worth. So, if you are getting ready to sell a business, these are the steps to take:
Make the emotional decision -- be prepared for life without the business and be prepared to hear
negative things said about your business by others.
Determine the valuation -- a professional business valuation expert will provide you with the most
realistic range and help you establish the expectations.
Determine if the return is sufficient to meet your financial goals -- remember the business is only worth what someone is willing to pay for it; if the valuation and your expectations don’t jive, you
may need to reconsider.
Prepare the business for sale -- make sure financial statements are accurate and professionally prepared,
leases are in place, key personnel issuesresolved, etc.
Hire a professional intermediary -- Selling a business is emotional. A professional intermediary will:
– Ensure that the process doesn’t get personal.
– Manage all aspects of the transaction professionally and confidentially.
– Minimize the ups and downs of a transaction.
– Keep the deal on course.
Market the business -- determine the level of confidentiality you require and look to market the business to the communities who will most likely acquire a business like yours.
Meet with buyers -- always accentuate the positive about the business; new buyers do not want to hear
about labor problems, difficult customers, etc.
Negotiate with realistic expectations -- ask yourself, if I was on the other side of the table, would I do this deal?
Close the deal -- make sure the deal is structured in a manner that maximizes your after tax dollars and
minimizes your level of future risk.
Remember -- not everyone who expresses interest in your business is a true buyer. Beware of the
following types:
The lifelong corporate/employee -- there is a reason why they haven’t started a business in the past – they are not risk takers and they may now be looking to buy a business because something went wrong in their career.
The tire kicker -- these are the worst kind of prospective buyers as they love to window shop but
never buy a business; you know you’ve got a tire kicker when they want to spend hours upon hours
asking senseless questions.
The “I don’t know what type of business I want” buyer -- These are almost as bad as the tire kicker; if they can’t make a decision as to what type of business they want to be in, how are they ever going to make a decision to buy a business?
