Selling a business requires the same planning and commitment that starting a business required - except that there is more at stake. This short, step-by-step guide will help you get started. Don't leave your business sale to chance. Begin planning now to maximize your chances of success.
Step 1: Define your business sale objectives:
How much money do you need to achieve your financial goals?
When do you want to sell and then leave the business?
What kind of buyer do you prefer to sell to: a third party or insiders (employees, your management team, family)?
Step 2: Get an objective, professional business valuation.
This will determine if a successful sale is feasible, and in what time frame. A good business valuation will also identify value-enhancing opportunities.
Step 3: Prepare your company for your departure.
This typically involves building a management team and focusing on the business value drivers necessary to meet your financial goals. This step may require you to continue running your company for a while and to make some targeted changes in the business. Too many business owners wait until they’re burned out, ready to retire or forced to rush by some unexpected event. Give yourself plenty of time by beginning your plan long before you actually want to sell!
Step 4: Initiate the business sale process.
The sale process doesn't begin with "selling", it begins with market research to identify potential acquirers and pre-sale due diligence make sure there are no surprises that might derail a deal. The more prepared you are the more likely you are to achieve a successful sale.
Most owners sell to a third-party because it can be accomplished in less time and because it typically yields the best price. This is especially true when the market is strong and strategic buyers are active.
An insider sale can be riskier and more complicated and it usually takes longer. Insiders such as co-owners, employees or the owner’s family often don’t have the money or the ambition to buy the company. If an insider sale is a real option, there are several ways to reduce the risk associated with Transferring Your Company to Key Employees.
We recommend these steps to selling a business:
1) Find a merger and acquisition advisor (M&A Advisor) who can explain the process clearly and realistically and help you plan for the sale. Read as much as you can on the business sale process.
2) Begin assembling a business sale team including an M&A Advisor, an attorney who specializes in business sale transactions and an accountant who understands tax minimization techniques. If you don't already have a personal financial advisor, now is the time to find one. These advisors may cost money in the short-term, but if you choose wisely, they’ll make you much more money in the long-term by:
Helping you avoid the most common deal pitfalls.
Minimize the tax consequences of the deal.
Developing a marketing strategy to engage the right potential buyers at the right time.
Designing a sale process that allows you to focus on running the company with minimum disruption while potential buyers are engaged and a deal is negotiated.
Helping you convert your business equity into a diversified portfolio of investments that will support your overall financial goals.
3) Create a written plan and work that plan, with the help of your advisors, until you are able to sell your company to the buyer you choose for the money you need.
Conclusion
Selling a business is one of the most challenging and life-altering endeavors of your career. Success requires planning, effort and discipline - the same attributes that made you a successful business owner in the first place. The sooner you begin planning and building your M&A advisory team the more likely you are to sell for maximum value, when you want to and to the buyer of your choosing.
About Venture 7 Advisors
Venture 7 Advisors is a team of merger and acquisition advisors who assist the owners of small and mid-sized companies to plan and complete the sale of their business. We find the best buyer to meet each business owner’s financial and legacy goals. We represent clients in consumer products, distribution, manufacturing, B2B services, construction, telecommunications, and eCommerce from offices in Burlington, Vermont, the Hudson Valley, New York, and Western Massachusetts.
We're here to talk about your situation, provide information, discuss your options, and put things in perspective. Contact us at any time:
Bryan Ducharme
Managing Partner
Mobile: 802 578 6462
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