Selling a business is overwhelming. And while there’s no getting around the complex process, negotiations, and paperwork, there are steps you can take prior to listing your business that will help to smooth the process. Being prepared means less anxiety and surprises throughout the process & more satisfaction when the sale is complete.
1. Know Your Value
Value is the first step for any business evolution. An accurate and comprehensive assessment of value is key to realizing what your business is worth when it’s time to sell. Beware though, taking shortcuts to value will often result in money left on the table.
READ: Using Multiples of Revenue to Determine Value
2. Gather Your Team
As you go through your selling journey you’re going to need a team of professionals in your corner to ensure you don’t run into any regulatory issues, or leave any money on the table. You’ll need a CPA and a personal lawyer to act as your advocate. But you’ll also benefit from a nonadvocacy consultant who is committed to the success of the deal and a successful transition as a whole – an expert in the process who can alleviate the guesswork and is available to answer any questions.
3. Imagine Your Ideal Buyer
Before you list your practice in search of a buyer, you should spend some time thinking about your ideal buyer. What attributes, attitudes, experience, and philosophies are important for the next owner of your business to have? Which of these criteria are essential, and which would you be willing to let go of in lieu of other favorable deal points?
4. Be Honest with Yourself
There is no wrong answer when it comes to what you want for the business you spent a career building. What do you really want from this sale? What are your priorities for the future of your business without you? Clients? Employees? Company Culture? Money? If you’re honest with yourself, you can make better decisions and have less anxiety throughout the process.
ASSESS: Plan for Sellers Workbook – get your priorities straight
5. Make a Decision on Bank Financing
Bank financing is becoming a more commonly used tool in the acquisition process, moving away from more traditional deal structuring. There are pros and cons to bank financing–for both buyer and seller. It moves away from the “shared risk / shared reward” concept that ties final value to the success of the transition and client retention, but it also removes the 3-5 year (on average) wait before the seller can actually receive full payment for the business. It’s up to you to decide whether you’re open to your buyer using bank financing.
READ : Using Bank Financing to Expand Your Options
6. Keep Realistic Expectations
Once a buyer is found, the selling process still has to get through due diligence, contracts, and negotiations before it can finally close. Don’t rush the process. Every step is necessary. Stay patient and courteous throughout–tension and friction will not point to a smooth closing. You’ll be able to avoid frustration by knowing what to expect, and having your ducks in a row ahead of time.
ASSESS: Plan for Sellers Checklist – sort out the details
Start preparing now for your sale, even if you are years away. When you prepare for the selling journey as a whole, and get ahead of each obstacle and decision that may arise, you’ll find the process runs more smoothly, is much less stressful, and is more likely to have a satisfactory transition.