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Surprisingly enough, if your expectations are reasonable obtaining the
amount of money you want for your business is probably the easiest part
of a business transaction. It is the less obvious issues which most
people fail to examine, and those seem to cause the most problems.
Okay, so you know how much money you want, but have you considered
issues such as:
·
Will you be staying with the
business for a time to help with the transition?
·
Do you have plans to start another
business which might compete with the business you are selling?
·
How will the sale of your business
impact your family, your employees, your personal finances?
·
What will you do after the business
is sold?
·
After you have handed over the keys
to the buyer, how will you feel?
·
After the sale, if the buyer
immediately runs your business into the ground how will you feel?
·
Have your considered that a
potential purchaser will want to see your financial records for the past
few years. Are your books clean?
·
Is your business attractive to a
buyer?
·
How will your taxes be affected by
the sale of your business?
I pose these questions not to deter you,
but to illustrate some of the considerations beyond the purchase price
which you must consider if you are to have a successful sale.
WHY
DO YOU WANT TO SELL?
Your business
was probably built with your blood, sweat and tears. It took you years,
perhaps a lifetime, or in the case of a family business, generations.
Now you are ready to move on and leave your business. With so much time,
money and energy invested, you hope that the fruits of your labor will
be fairly returned to you. Look very closely at your reasons for
selling, the most common of which are health, boredom, work load,
business problems and money. If any of these reasons apply to you,
perhaps you should consider alternatives such as franchising; developing
a partnership; merging with a similar company; going public; and
absentee ownership or partial retirement. If your main motive in
considering sale is a decline in the health of the business, you should
probably be considering something other than a sale.
If you want to sell because your business
because it is failing or just past its peak, you are in a poor
bargaining position and will probably not receive your expected purchase
price nor will you be in a position to negotiate other important terms.
WHEN SHOULD YOU SELL?
The most common
mistake made by sellers is to take the plunge fueled by emotion.
Emotion is unavoidable, after all your business may be like a child to
you but you cannot let it control your actions. Building a successful
business takes planning – so does a successful sale. Consider the
following:
·
Is your
business at its peak, or is it on the downturn?
·
What is the marketplace like?
·
How many qualified buyers might
there exist?
·
How will the economy affect the
ability of a buyer to obtain financing?
WHY LOOK BEYOND THE
PURCHASE PRICE?
The sale of your business will probably
affect your financial and personal situation, your employees, suppliers
and family. The implications will be widespread and will most definitely
take an emotional toll on you and key employees.
Talk to those people close to you about the
potential sale. Ask for input from trusted sources such as your family,
your accountant and financial advisor. When you have made a decision to
move forward, find an experienced attorney or consultant who will work
with you and your accountant to formulate a good strategy. Do not use a
general practice attorney or business broker. Find a professional who
has experience in buying and selling businesses. Ask to speak to former
clients, see a transaction list or have a lengthy discussion with a
potential attorney/consultant about his or her approach to selling your
business. This article wouldn’t appear on our web site if we didn’t
plug our services just a little. I am an experienced transaction
attorney who has a comprehensive approach to the sale of a business and
we stress formulating a good, solid strategy. Okay, the sale pitch is
finished. If you want more information about our services feel free to
browse our web site or
contact me directly.
If after careful soul-searching and
analysis if your motives for selling your company appear to be genuine,
then carefully develop a comprehensive strategy. It should include the
evaluation, preparation, pricing, marketing and actual sale of the
business. Your plan should also consider potential purchasers, the
negotiation process and closing the sale. Follow your plan and arm
yourself with competent advisors who can help you avoid common pitfalls
and unpleasant surprises. The result will be a smooth transition of
ownership and an enjoyable and rewarding “afterlife.” |
