You will be hard-pressed to find a business owner who doesn’t love what they do. It’s a remarkable feeling to immerse yourself in an industry that you’re passionate about. Those feelings of pride are only enhanced when you turn that passion into a solid cash flow.
However, being a business owner isn’t always fun and games. That is especially true when it pertains to selling your business. There are many hurdles to overcome before that final sale, and often there are mental obstacles to overcome as well.
Where to Begin
Okay, so it’s time to sell and you’re overwhelmed by questions that you don’t have answers to. How do I figure out my true value? How can I increase the value of my business? Who can I trust to help sell my business? For those that I put my trust in, how much will they cost?
A business owner looking to sell could ask themselves enough questions to make their head dizzy. That’s why trying to sell a business on your own is a massive and often foolish undertaking.
Start with someone who understands exit planning. This could be a specially trained wealth advisor, accountant or business advisor. Understand the cost of using advisors versus the cost of not using advisors. How much will your business be worth if you have a proper team in place, versus the value of your business if you try to be a one-person team?
Combining the expertise of wealth planners, accountants, lawyers and business advisors is crucial to realizing the true value of your business. Even if that true value is not where you want it to be, someone with exit planning experience will be able to walk you through a number of steps to help increase that value. They’ll help you figure out a ballpark number, and let you know if and when you need a proper business evaluation.
Start your process with getting your priorities straight. Good Exit planners can do an assessment of your company, helping you realize the high impact things that add value for the least amount of effort and/or cost. The exit planner will give you list of tasks to improve your business, ranked from most value for least effort, to least value with the most effort.
That goes hand in hand with the adage, work smart, not hard. Who’s not a fan of that?
Setting the Stage
So, you’ve gathered a team consisting of business advisors, wealth planners, lawyers and accountants who you trust, with at least one of them being a specialist in exit planning. When it comes to selling, you also have options at hand. Although options aren’t always a good thing for the overwhelmed business owner, your team can help you figure out what’s right for you and prioritize.
Depending on the avenue that best fits the circumstances, business owners use commercial real estate agents, business brokers, or private equity groups to help sell their business. If there’s an employee buyout in place, an Employee Share Ownership Plan (ESOP) specialist will often get involved. In some situations, a business owner may want to take their company public, but that’s a whole other kettle of fish!
Sometimes, the best solution is slowing down. Stepping back forces you to have the right management team and processes in place. That’s a huge win when you finally do go to sell, and it has the added benefit of allowing you to “practice” retirement.
All are reasonable options depending on the scenario. What’s right for you will come to the forefront during preparation for the sale, and from communicating with your team.
There are two things business owners can take solace in when it comes to using a team prior to sale. The first is the obvious factor that there isn’t the stress of tackling this massive undertaking alone. The second is that having a team helps you realize your business’s full value by fleshing out those high impact changes you can make. Those are details that can bring higher interest to your business and ultimately a better sale price and terms.
The old saying applies: You can put lipstick on a pig. That’s good from the outside looking in but when a letter of intent is signed, that’s when they can go in and see if your business is running smoothly, or if it’s really a pig.
Your team will take you through the steps to make sure your business is impressive, both inside and out. If you ask business owners who have gone through this process, they’ll say that it’s worth the time and the money to do so. It’s that last bit of investment you make in your business, that will pay off in multiple ways.