SELLING YOUR BUSINESS
If you are contemplating the sale of your business, give yourself time to gather information and understand what actions you can take now to adequately prepare for this life-changing event. Many business owners underestimate the complexity of a business sale. After all, they understand their business but often have no real idea of what it is worth. Most “for sale by Owner” tend to either underestimate or grossly overestimate the value of their business.
Selling a business takes some up-front preparation time. First, it is important to be realistic about the sale price of a business. Investing a little time and energy up-front can keep thousands of dollars in your pocket later on. A well-documented business valuation not only takes into account assets and income, but ideally should carefully consider market forces and expectations. Find a firm that is actively involved in the day-to-day business of business sales, to provide you some guidance on business valuations. While accounting firms may also provide business valuations, they often do not have an in-depth understanding of market forces or industry trends.
Armed with a realistic price for your business, you may then decide if you wish to handle the sale on your own or hire someone to help you with the sale. Again, knowledge is power. Find out what it takes to successfully sell a business. Talk to your trusted professionals. Call around. The ideal situation would be to find an advisory firm that will explain the importance of confidentiality, a good a controlled process, properly screening for qualified buyers, the importance of thorough due diligence, not only in uncovering what makes your business tick, but also to protect yourself as the current owner from future liability. Confidentiality is also key. You don’t want your employees or competitors to know that your business is for sale until it has changed hands. Too often, in their eagerness to sell their business, owners do not know how to properly screen potential buyers. Even when they are careful about screening buyers, they may not possess the experience to accurately interpret and analyze a buyer’s true intentions until it is too late. The dangers are obvious: from unintentionally giving away company secrets to competitors to having your private company information floating around town, the importance of confidentiality cannot be overstated.
Take a good long look at your time resources. As a FSBO be prepared to dedicate 10-15 hours per week to the sale of your business, from advertising, seeking out potential buyers, carefully screening them, understanding tax implications, deal structures, due diligence, negotiations, legal ramifications, as well as continuing to run and complete all of the tasks and duties of operating your business. If these tasks, required expertise, and experience appear overwhelming, then perhaps that is not the way to go. You may prefer to find a professional firm to handle the actual sale for you. Business Brokers/Business Intermediaries are experienced in providing advisory services and providing extensive extra resources for their clients.