Despite whatever your business does, there is no “market” to sell your business. While business valuators and accountants use the concept of willing buyers and sellers, it is rare to have numerous, willing and knowledgeable buyers available when you sell your business. But, there are numerous steps you can take in anticipation of selling your business to make the process more efficient and increase the value you receive.
An objective analysis of your business, its industry and potential purchasers is the starting point. What does your business really generate, and what will it generate without you? What are other businesses in your industry selling for, if at all? Analyze the potential buyers for your business, including relatives, customers, employees, vendors and competitors. Depending on your industry and the type of business, it may not be appropriate for an inexperienced business owner or a hands-off third party investor. Your most obvious potential purchasers are employees, fellow owners or others who know the business and the industry, have confidence in the long term viability of both, and may value your business like you.
Preparing your business for sale includes hiring employees or bringing on partners who could eventually buy the business or your interest by involving them in the ownership aspects of the business. These potential purchasers may value your business higher, as they have a higher level of confidence they will be able to continue the business successfully after the sale. Secure key employee, customer, supplier and vendor allegiances in order to maintain the value of the business. Begin a process of accounting and bookkeeping that demonstrates the value of your business, as opposed to running the business out of your checkbook. Identify the perks and benefits of owning your business, whether tangible or not.
Evaluate which assets are necessary for the business, which are not and which you would not sell with the business. Join or separate those assets accordingly. Determine not only what you think the business is worth but also your post-ownership lifestyle needs, and incorporate the sale of the business into your overall retirement and estate plans, as you may prefer a discount for cash over owner financing.
The earlier you analyze and implement your exit strategy, the more successful the later marketing and sale of the business will be. If we can answer any questions or assist you in this regard, please contact us.
Douglas C Tibble
dtibble@napervillelaw.com
