Ready to Sell Your Business? Here are some tips and considerations
A recent article on Inc. discussed some tips to keep you motivated when selling your company. We’ve expanded on these ideas and listed the important considerations that you should be aware of when you’re going through the sell process.
The sale takes longer than you expected
First things first, selling a business is a complicated process and generally takes longer to complete than you expected. This is especially true if you aren’t familiar with the process before hand. Knowing upfront that the process is long and arduous is important.
Keep your motivations clear
Since the process does take a long time, you are likely to get burned out at some point during the sale. It’s much easier to stay motivated if you have a reason for selling your business, and you stay focused on this reason. For example, you’re ready to sell off this business in order to startup a new business that you are really excited about. As long as you can stay focused on this new business venture, it will alleviate some of the stress you will likely feel during the sales process.
Find a team of professionals to assist you
Since selling a business can be such a complicated process, you should enlist the help of a number of professionals who have been through this process before. You should also be selective about who you choose to assist you, since you’d hate to fail to finalize the sale of your business because your accountant failed to add the numbers right or your lawyer left out an important term in the purchase sale agreement. Here are a few tips for dealing with accountants and lawyers:
- Accountants. Your accountant will ask for more financial information than you can imagine. Don’t be discouraged by the constant interrogation over your financial records. This is a necessary part of the process.
- Lawyers. Everything coming from your lawyer is not meant to be negative, it’s meant to protect you. During the sales process, lawyers are supposed to find possible problems and let you know where there may be a risk for you or your business. Don’t feel discouraged by the barrage of negativity—e.g. you’ll often hear from your lawyer: “Here’s the problem…” or “Well the problem is…”—rather, embrace the fact that you’re being protected.
No matter what, keep pressing forward
There will inevitably be times when you believe the deal is dead. This is normal, and will likely happen more than once throughout the sales process. You and the buyer will not agree on every term, and there will probably be times when things escalate to the point of hanging up the phone or walking out on a meeting during the middle of heated negotiations. This is also normal. The point here is that there are going to be times when you think there’s no way the deal can move forward. It is at these times that you must stay motivated and keep pressing forward.
Be realistic about your asking price
One of the worst things you can do when trying to sell your business is to be unrealistic about the value of your business. It’s often difficult to value your business since it’s your baby—you’ve grown this business from nothing and you inevitably believe it’s worth more than the average person would. This is why it’s important to seek out objective opinions about the value of your business. Use a third-party valuation company, and be willing to let go of the “estimated values” that you’ve calculated yourself.
Continue the day to day business
During the sales process, if you forget to maintain your daily operations in your business, you may end up losing out on significant value in the sale if profits begin to slip. By focusing on maintaining your business, you can step aside from the sales process (which is necessary to alleviate some of the stress) and focus on continuing to grow the business, something every potential buyer will appreciate.
Enjoy the process
Once you’re to the point that you’re ready to sell your business, you’ve succeeded. Enjoy the sales process as much as you can. We’ve noted that it is often long and complicated, but this doesn’t mean it can’t be an enjoyable experience. Hopefully these tips and considerations will help shape your experience into a more enjoyable one when you choose to sell your business.
If you’re interested in learning more about selling your business or you’d like to discuss other exit strategies, please feel free to contact us.