Selling a business is often a complex and time-consuming project, and sometimes mistakes in the process can derail a transaction. To maximize valuation and to help ensure a successful closing, make sure you consider the following:
One: Be Clear Regarding Your Goals. As you begin to consider a sale, take the time to consider and clarify your personal and financial goals, and educate yourself on the sales process. Why do you really want to sell the business? How do you see your life post-sale? How much money do you need from the sale, and does that realistically match the value of your business today? Entrepreneurs who bring a level of confidence and self-awareness regarding their goals often glide through the sales process. Owners who are not clear about their goals or have underlying or unexpressed concerns about the sale sometimes vacillate, add stress, or take too long to make decisions -- all of which can cause buyers to walk away.
Selling a business is a financial and emotional decision. Advisors often focus on the financial aspect of the transaction, but it’s also important to recognize and address the emotional aspects of a sale. An exit plan that identifies and prioritizes all your options and goals can help you work through these issues.
Two: Keep Running Your Business. Selling your business can take up a good chunk of your time, and if you’re ready to get out, it’s tempting to focus only on the sale. However, you are selling the performance and productivity of your business, so it is also critical to maintain the business at peak operating capacity. A loss of focus can result in a loss of business, and a subsequent reduction in selling price. This is the time to dig deep, put your foot on the gas, and rally your team to drive business performance, knowing there is light at the end of the tunnel.
Three: Think Like A Buyer. Depending on the size and type of your business, there may be three general types of buyers: A high-net-worth individual who wants to invest his or her money and run the business personally; a competitor looking to grow; or financial buyers including private equity groups. It is important to think through how each of these buyers might look at your business. Put yourself in the shoes of each type of buyer, and think about all the issues that could keep you up at night if you were buying your own business. You know where the true challenges lie, but a sophisticated, smart buyer will also recognize and consider potential challenges. Fix or address any issues that might be a concern prior to a sale, or when that’s not possible, be prepared to address challenges with a buyer.
Four: Execute With a Team. Selling a business can be a challenge. But on the other hand, it’s not harder than starting, building and successfully running your business. As successful entrepreneur, you already know how to navigate uncertainty, and how to identify and hire people who can help you. To sell successfully, draw on these traits, educate yourself, and build a team of experienced advisors.
If you are considering a sale, please reach out to us. We love to help! We are available to answer your questions, provide suggestions and help you understand the sales process. Email us or schedule a call.
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