When you’ve worked day and night to build your business from scratch, putting it out for sale could be a tough decision to make even if necessary. There’s bound to be a high emotional quotient involved and you want to get it over with as fast as possible. However, it’s important to remember that if you have decided on selling your business, it is naturally your top priority to ensure that you get the maximum value out of the deal. You can’t just wake up one fine day and decide to sell. Instead, wake up and decide to make a careful exit plan for your business.
Get the Right Guy for the Job and Let Him Do It
Everybody has a role to play and when it comes selling a business, it’s best that you leave it to the experts. Your job is to establish that your company does amazing business and provide your broker or investment banker with enough convincing data to create a wonderful story that will sell your business to the right buyer at the right time. When you have a business for sale your business broker will have the responsibility to vet buyers, be the point person for initial negotiations and proposals and perform as required during the due diligence phase. At this point, instead of showing who is in charge, it would be in your best interests to just step back and give your consultant a free hand to deal with. As a CEO, all you need to do is focus on what you do best, run a successful business and ensure it stays successful.
Other Factors You Need to Consider When Planning a Sale
Make your business independent from you. A buyer will obviously prefer a business that runs perfectly without you over one that will fall apart if you are not on the scene every single day. Remember when your company is dependent on you; your purchase price could get hit.
Everybody plays the tax game, it’s nothing new. However, in the years that run up to your company sale, it’s always a great idea to pay your taxes in full instead of risking complications that may arise at the time of your sale.
Make sure that you have all impending legal issues sorted out in advance. Potential buyers will sniff them out and it gives them an upper hand to give you a raw deal when setting the purchase price. Apart from running that legal check on yourself, make sure you do one for potential buyers as well and you can avoid a great deal of pain later on.
Make use of current technology and leverage the power of the internet when you have a business for sale. Today, most small to mid sizebusinesses are sold online through specific portals. That being said, there are plenty of buyers lurking outside these portals. Don’t focus your sale strategy entirely through the internet. You can get the full value of your business only from buyers who are not “searching for something to buy.” It’s also important to note that the private equity has been seeing tremendous growth to the extent that it is diverting substantial capital from public market zones.
Get an intermediary to represent your business sale. Don’t waste time dealing with every potential buyer on your own. Your intermediary can also work on rounding up buyers so that you create a demand in the market and eventually get a high purchase price for your company.
Keep your employees out of the deal. Do not give any hint of your intent to sell too early in advance. It will cause unnecessary panic and hurt performance and consequently your purchase price. You cannot just deny everything when asked. You can give a general statement about the company looking for options to expand or a beneficial partnership for the company.
Advantages of Selling a Business
- releases you from the burden of ownership and managing a company. You are free to pursue other interests that you never had time for
- You can invest in a wide array of assets over a larger spread of risk over return
- You should capitalize on the situation where the economic conditions favour your business.
- If your business is your prime asset, selling it gives you the chance to take a portfolio approach to your investments. This gives you more liquidity.
Disadvantages of Selling Out
- You could become easily irritated or bored when you don’t have anything to keep you engaged, which could lead you to making errors of judgement.
- Whatever be your wealth, the loss of a regular income is definitely going to affect you in the long run.
- If you are not confident about passive investments, you could stand to lose your investment over assets that you fail to understand clearly.