If you are thinking about or planning to sell your business, give yourself some time to get prepared, including emotionally.
Six Steps to Start Preparing
- Give yourself the necessary time to prepare.
You should allow 2-5 years to plan your exit. The unfortunate reality is that most business owners do not have an exit strategy which can adversely affect your ability to maximize the return on your years of hard work. Think about your age and lifestyle needs, long range financial planning goals and any factors within your business or industry that will affect your optimal time to sell. - Define elements of your plan and a timeline
What does a future sale look like for you? Who will you likely sell to and who is your ideal buyer? If you have children, ask them early on whether they are interested in purchasing the business so there are no surprises. Document your thoughts and timeframe and always have a contingency plan. - Start the conversations early with a broad set of professional advisors.
Build your team of trusted advisors to invest time in learning and understanding the process and steps to prepare to sell.
Invest in understanding the process as this time will prove extremely beneficial in the long run. Knowledge is power and preparing well in advance will serve you well.
Team members typically include:
– A business or transactional attorney
– Your accountant/CPA
– Your wealth manager/financial advisor
– Key employees who need to be involved (e.g., CFO/controller, family members)
– Business Broker/M&A Advisor
– Other potential team members may include a real estate attorney, trust and estates attorney, environmental attorney, licensing attorney, business consultant and/or employment attorney.
Gaining knowledge to get smart about the process should not cost you anything. Maybe a lunch or cup of coffee, but you should not be paying anyone at this point for insight and information. - Have early conversations with your wealth manager/financial planner
We recommend that you have open and honest conversations with your wealth manager or financial advisor as you start formulating a plan to sell your business. Make sure you have discussed possible timeframes to have scenarios developed accounting for time, wealth goals and spending and lifestyle habits. Include what your goals are from a sale, accounting for potential tax considerations and estate planning impact. Understand what your business is worth ahead of time by working with a business broker or valuation professional so you can understand how it fits into your financial and retirement plan. - Meet with us to understand the business brokerage process and to discuss value and drivers of value
We urge you to reach out to us during this planning period to have a consultation so we can answer your questions about the process of selling a business. We can also provide ideas and strategies to work on to drive value for your business within your timeframe. During a consultation, we can also share insight into prospective buyers and what is important to them, including individual buyers, strategic buyers and private equity firms.
We will also address common concerns business owners have when thinking about selling including typical timelines, cost and confidentiality.
You should obtain an idea of the current valuation of your business early on. This will enable you to evaluate what you need to focus on if the current value does not meet your goals. - Think about and document what matters most to you?
As you gather information about the process and put together a team who can guide you and be with you every step of the way, it is important to document what matters most to you and get that clear.
– Is it the price and terms of the deal?
– Is it cash received at closing?
– Is it avoiding seller financing or terms that include an earn out?
Terms of the sale can have an impact on:
– Your lifestyle after the sale
– Family members working inside or outside the business
– Employees
– Management team
– Customers/Suppliers
Think about what matters most to you so you have clarity which will assist you in being emotionally prepared.
Our experience has shown that business owners who plan well in advance of selling (a two-to-five-year runway), are better prepared emotionally and procedurally to embark on the process.
There is no magic formula as to when the right time is to sell your business.
As experienced professional business brokers, we welcome the opportunity to have a no cost consultation to meet with you, discuss your business and goals and answer your questions.
Your Goals Fuel Our Passion.
