I Am Ready to Sell My Business – Now What Should I Do?
Quote: from High Anxiety by Mel Brooks (my favorite)
Brophy: I got it, I got it, I got it [thump]
Brophy: I ain’t got it.
Sometimes, when Italk to entrepreneurs about their “plan” to sell their business, I begin to think of this scene from High Anxiety. They start with some high-level thoughts as to how they will complete the sale only to drop the ball when you ask the first question about execution. Most soon realize, like everything else in the world, this is a process. In fact, we have been through it so many times that we have a registered mark for it called TransactReady®. The purpose of this blog is not to take you through the entire process, but to focus on some preliminary thoughts to help you get started.
One major assumption we will make is that there is no one to leave the business to (so, a succession plan is not an option) and you have decided to sell (if not, see my blog “Am I Ready to Sell My Business?”) So, here are some focus points for the entrepreneur:
- Know what your business is worth – Get a solid understanding of what the business is worth. Next to seller’s remorse, an unrealistic expectation as to value is a second major reason why a sale of a business fails. Use brokers and other professionals to help you gauge what you should expect. It is rare that someone comes along and offers a price substantially above what the professionals think is fair.
- Do a SWOT analysis – Do a thorough assessment of your strengths, weaknesses, opportunities and threats. Big checks for your company are usually accompanied by significant due diligence, so it is best to know where you stand (warts and all) before a potential purchaser does.
- Make sure you will realize enough from the deal to meet your needs – Engage a professional to assess those needs. While you may think you know what it takes to maintain your current lifestyle, an objective view by an accountant or a financial adviser can be eye opening when it comes to making sure that your financial objectives will be met.
- Understand how you want your business to look after the deal. – We often hear an entrepreneur say they want to sell all (or a good part) of their business, get a good price and stay in control. Our standard response to this is “you probably can stop looking; you are not ready to sell.” However, that is not to say that you may not have options depending on your strong preferences. If you want to keep your management intact, you probably want to consider a sale to a financial sponsor, including management or funding a sale yourself. If maximizing sales proceeds is your preference, then sale to a strategic buyer may be the best route.
- Think long and hard before doing this yourself. – Unless you have been through this process before, doing it yourself is not for the faint of heart. You probably would not sell your home or building without a professional broker, so why choose that route for perhaps the transaction of your lifetime?
There are plenty of very qualified professionals to help you through this process. You can still control it but trust me, you do not want to do it on your own. Get the right help and you will not be sorry.
