Selling a business is a significant life decision requiring proactive exit planning. Timing is key, and hasty decisions driven by burnout, health issues, or an unforeseen crisis (like a pandemic) undermine your ability to pinpoint the right moment and to sell from a position of strength.
The steps below can help you formulate a solid pre-emptive plan, manage the transaction, and realize your ultimate goal.
- Clarify Your Rationale. Examine your reason for selling—it’s one of the first questions a buyer will ask. Potential buyers will want to know why they should be interested in your business.1
- Assess the Value. Obtain a professional valuation, one that’s based on an accurate assessment of market conditions, revenue, and growth potential. Sellers often overestimate the value of their own property or business.
- Clean Financial Records. Ensure your accounting documents are up-to-date and accurate. You might consider an audit by a CPA to enhance credibility and smooth the buyers’ due diligence process. Being transparent about assets, liabilities, contracts, taxes, etc., builds trust and reduces the chance of disputes.
- Strengthen Business Operations. Few buyers are looking to clean up chaos. Equip your management team for leadership, incentivize key staff to stay on post-sale, and structure systems to enable the business to run without you. You’ll also want to document operational processes, workflows, and SOP to streamline the transition to a new owner.
- Engage the Experts. Work with financial advisors, tax advisors, attorneys, and business consultants or brokers who are experienced in facilitating successful sales. A Certified Exit Planning Advisor (CEPA®) can also guide you smoothly through the exit process.
- Identify Prospects. Types of buyers can include private equity firms, competitors seeking to enhance market presence, entrepreneurs looking for a new venture, and next-generation family members. Know your targets’ motivation, reputation, financial capacity, and track record with past acquisitions.
- Plan for After the Sale. The emotional fallout of selling can be surprising. It’s wise to plan for your post-sale life, whether pursuing a passion project or looking forward to a quiet retirement. You’ll want to consider your emotional readiness and what you expect to achieve by the sale. Business is personal.
See also:
uschamber.com/co/start/strategy/preparing-your-business-for-sale
madisonstreetcapital.com/what-are-the-biggest-challenges-when-selling-your-business/
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