I Want to Sell My Business... Now What Do I Do?

1. Soul Searching: Are You Sure You Want to Sell?

The decision to sell your business is a daunting task that is both exciting and nerve racking. After years of hard work and dedication, you’ve built something incredibly valuable, and letting go can be a complex emotional journey. But before diving into the sale process, it’s crucial to ask yourself: Are you truly ready to sell?

Evaluating your motivations is crucial. Are you ready to retire, are you looking to pursue a new venture, have you reached the growth ceiling in your current market, or did a lucrative offer come your way? Selling a business is a significant life change event so honesty with yourself is paramount.

2. Planning for Success: Getting Your House in Order

A successful business sale requires meticulous preparation. An understanding of your business’s market worth is critical and allows you to set realistic expectations and negotiate effectively. Broker’s Opinion of Value (BOV) reports can be a great option for this. However, don’t neglect your financial records, because potential buyers will scrutinize every aspect of your financials to assess the business’s health. It’s also important to clean up bookkeeping and address any discrepancies to avoid raising red flags. Another major consideration is assembling your exit team; while this will vary based on the type of business and deal, it is common to have an accountant, lawyer, and transaction expert (normally a business broker) at a minimum. The accountant can ensure your financials are in order and advise on tax implications of the sale. The lawyer will handle legal contracts and navigate potential roadblocks. A business broker, with their experience and industry connections, can help identify qualified buyers and streamline the sales process.

3. The Sale Process: A Step-by-Step Guide

Once you’re prepared, it’s time to navigate the intricacies of the sale itself. The first step is to determine your timeline. Are you open to waiting for the right buyer or do you need a quick sale? Knowing your timeframe will impact your marketing strategy and negotiation tactics. Identify your ideal buyer. Strategic acquirers seeking to expand their market share, financial buyers looking for a return on investment, or even someone seeking to become an entrepreneur through acquisition (ETA) could all be potential candidates; typically, strategic acquirers will pay the highest return due to synergies associated with the transaction. A detailed understanding of market trends in your industry, the competitor landscape, and recent transactions will help you refine your target buyer profile. With a clear buyer profile in mind, you will be able to refine your approach and marketing stratifies in a manner that best caters to your ideal target. This might involve discreet marketing through a business broker or more public methods like online listings.

Here is a consolidated list of the 7 common steps is selling a small business:

1. Identifying your reason(s) for selling
2. What is your timeline
3. Determining the value of your business
4. Assembling your team
5. Getting your house in order
6. Creating a target buyer profile
7. Formulating a post-close game plan
 

4. Beyond the Sale: What Comes Next?

Beyond the sale itself, a period of transition awaits. This is a time to focus on both financial security and personal fulfillment. Financial planning is a crucial consideration. Utilizing a tax advisor can help you navigate the tax implications of the sale and develop strategies to minimize your tax burden. This might involve maximizing contributions to retirement accounts or exploring tax-deferred investment options. Depending on the size and structure of the sale, you might also want to consider consulting with a wealth manager to develop a long-term investment plan that aligns with your financial goals. In the case of a retirement sale, estate planning is also necessary. Developing a comprehensive estate plan ensures your wealth is distributed according to your wishes and minimizes potential tax burdens for your heirs.

But beyond finances, selling your business is also an opportunity for personal exploration. For many entrepreneurs, their business has been their life’s work. While the sale can feel liberating, it can also leave a void in the seller’s life. This is a time to consider the activities you’ve always dreamed of doing, whether it be traveling the world, volunteering for a cause you are passionate about, or finally starting that creative project you’ve been nurturing for years.