The decision to sell your business is an important one and should be carefully considered. Therefore, in a quick read below, I have written out what I would consider to be important when selling a business.
No Plan
Oftentimes when I ask a business owner if they are ready to sell their business in the foreseeable future, they answer: “I haven’t really thought much about it. I guess I will sell when I’m near retirement age.” I then ask what is their plan if tragedy strikes in the form of a loss of a key employee/owner, economic downturn or major industry shift, fire or other natural disaster, etc. While seemingly drastic, these events do occur and many business owners are not prepared to deal with them.
My advice to those who want to develop a contingency plan is on each anniversary date of the business fiscal year, reflect back on the performance of the company and see if it met or exceeded goals. If it didn’t, take a hard look at why the business didn’t perform to your expectations and what can be done about it. A great way to look at this process is to ask yourself “Would I buy this business now as it is?” With that said, consider having a third party take a look at your business with fresh eyes and objectivity.
Tune Ups
I believe a business, like an automobile, should receive a regular and thorough inspection to see how it is performing. A business broker can help with this. By reviewing company financial documents, determining the competitive landscape, and setting a current valuation for the business, a broker can help prompt the right conversations one should be having or thinking about when it comes to their business. A broker also helps set a good benchmark for how a company is performing and if any changes need to be made, they can lend expertise to get the business where it needs to be.
Being aware of how well the company is doing and making iterative changes helps to improve the valuation, marketability and ultimately, sellability, of one’s business. Conversely, when an owner is not aware of how the company is doing and they decide they want their business sold, it could lead to delays in selling their business or getting the price they had hoped for. As a broker, it is my job to help provide and receive the most value for a business either way, so typically there is no doomsday here for waiting, but starting this process much earlier does pay off.
The Plan
Once an owner is ready to sell, a business broker, like myself, provides services such as: a full and proper valuation, Confidential Information Memorandum, uses multiple means to market the business nationwide, finds and screens qualified buyers, shares and evaluates the offers made, coordinates the exchange of documents between the buyer and seller and their respective financial and legal representatives, and guides the buyer and seller towards the closing.
Please do not hesitate to reach out to me on the content of this article or anything else related to your business or future business for that matter. Happy to help!
Van Daughtry
