by Deborah Sweeney | Featured Contributor
Last month, I discussed how future business owners can avoid unforeseen shocks and surprises before buying a business of their own. On the flip side of the coin is selling a business which has a series of difficulties all on its own ranging anywhere from knowing the right time to sell to finding a capable buyer and even second guessing whether or not it’s time to let go of the business just yet. Regardless of the industry your company may be in, I’ve created a step by step strategic plan on how to successfully, and carefully, sell a business with the people and tools you’ll need on your side in order to make a deal.
1) Consider Strategic Buyers over Private Equity
Private equity often brings in their own teams, tear apart the teams that are already in place and place a ton of pressure on the owners relative to the growth of their business. Some private equity firms also put more of a focus on short-term financial returns and may not carry the company culture already in place in the long run either. Private equity may actually cause more stress for the owner or selling party than a strategic buyer who more often than not is in it for the long haul. Strategic buyers may want the underlying business to stay semi-intact and may even encourage growing the business. In many circumstances you may get more for your money with a strategic buyer than with private equity, but do your research on both and see what fits your business the best first.
2) Know the Worth of Your Business
Don’t get caught off-guard if an offer comes in and you don’t know the value of your business. Make sure you have your numbers organized and you validate the price you believe your business is worth with the right amount of detail to support your valuation. In the same regard, be realistic. Some business owners overvalue their companies too far – a niche sandwich shop shouldn’t be put in a pricing range akin to what Apple might receive an offer for.
3) Got Paperwork?
Streamline the entire process by keeping all of your corporate and financial records in order during due diligence. This includes everything from executed contracts to employee agreements and all of your minutes and bylaws.
4) Know What Matters to You
Selling a business may not just be about the money. You may wonder how the next owner will decide to maintain its corporate culture. Or you may want to continue to be involved in the business or find your exit strategy. Know what matters most to you and look for potential buyers who fit that mold. You’re not likely to find an 100% match, but the more you know what you want, the easier it is to find that proper acquirer.
5) Surround Yourself with Experts
Great lawyers, strong accountants, experienced business brokers or certified business intermediaries with experience in your industry – it’s time to bring out the best! Align yourself with people and companies you trust and can work well over time with. Selling your business is seldom quick and easy, so making sure you have the right players on your team is important.
6) Be Patient
Don’t rush into making decisions. Be deliberate, take your time, sleep on ideas you’re unsure of, and negotiate well. This is still your business until it’s sold, after all. Give it as much care and attention up until the very end that you would have done just as when you first started working with it.
Deborah Sweeney is the CEO of MyCorporation.com. MyCorporation is a leader in online legal filing services for entrepreneurs and businesses, providing start-up bundles that include corporation and LLC formation, registered agent, DBA, and trademark & copyright filing services. MyCorporation does all the work, making the business formation and maintenance quick and painless, so business owners can focus on what they do best. Follow her on Google+ and on Twitter @deborahsweeney and @mycorporation.