Photo Credit: Kevin Dooley
If you’re thinking the time is right to sell your business, you should assemble a good team of professionals to help. Selling a business is complicated and is not best done by yourself, even if you have sold one or ten businesses before. Here are some things to do to make the transaction successful:
- Hire a team of professionals to handle the sale from beginning to end. You have invested considerable time and effort into building your business, so having a team of advisers who do this for a living is crucial. At minimum include an attorney, accountant and personal financial planner. In most cases, it also makes sense to hire an investment banker or business broker to help you package, market and sell your business. In each case, make sure your advisers are representing only one side of the deal – yours!
- Most unsuccessful business sellers first decide how much money they need from the sale, and then set the price from there, which is absolutely backwards. Your financial needs or wants have nothing to do with the value of your business on the open market. Your business broker or investment banker can tell you the value of your business. Then, your financial planner can help you build a post-sale personal financial plan which will help you determine whether or not you are financially ready to sell the company at that price.
- Do an assessment of the accounting, operations, administrative and legal affairs of your business and make sure they are in order before marketing your business to buyers. Sometimes this means repairing some equipment, finding misplaced records, or having an audit done on the financial statements. Much like getting your car detailed before putting a “for sale” sign on its windshield, you need to have your business records cleaned up and in order to attract the most bidders and get the highest price.
- Your team of professionals will help you understand tax implications, reporting obligations, regulatory requirements, contract drafting, employment issues, and a host of other issues that may be unfamiliar. Not considering and planning for these issues properly can easily unravel a good deal.
- The buyer will also have a team of professionals working that side of the transaction and you will need to prepare for due diligence. Put together an electronic copy of all relevant documents so you can get those sent to prospective buyers immediately when asked. This will speed up the selling process and make you appear organized and serious.
Keep in mind that you should continue running the business well to ensure that it remains sale-able throughout the process. Should a deal not close, you want your company to remain attractive for the next buyer. Management and employees need to stay focused on the business while you focus on the sale. That is another reason to hire professionals to manage the sale process with minimal distraction to you and your employees.
Finally, be sure to give yourself plenty of time to work with the right professionals to prepare and execute a good exit strategy. You do not want to be up against any deadlines or other time-related pressures when selling your business. When in doubt, allow for extra time, as a sale process usually takes at least six months to do it right, and can often take longer if the first buyer gets cold feet and backs out, which is common.