ANSWERS TO KEY QUESTIONS
Selling a business: How to get started
Deciding to sell a business is one of the biggest and most challenging decisions a company owner will ever make. The process involves lots of moving parts, and it’s easy to make a misstep if you haven’t planned ahead. So, what are the key things you need to consider? And how should you prepare and get started to maximize your chances of success?
Making sure you’re ready
Business owners choose to sell their companies for multiple reasons, from profiting financially to pursuing other business ventures or choosing to retire. Either way, selling a business you have built from the ground up is likely to be the biggest – and toughest – decision you will face as a company owner. But it doesn’t have to be goodbye for good. There are different ways to approach the sales process. You might want to stay on as a senior leader or consultant. You could choose to sell part of the company. Or maybe you want to pass the business on to a family member.
Think about what arrangement would work best for you. It’s likely that what you decide to do will reflect your reasons for selling – be that to retire, start a new venture or diversify your wealth. Whatever the reason – and there is probably more than just one – you need to think hard about what you want the outcome to be. What are your non-negotiables and best-case scenarios?
Having a clear vision
Before making the leap, it’s also important you have a plan for the future. What you decide to do going forward may affect what you do now, so you need to be clear about what you want your next step to be. Having a clear vision will also help you commit to the sales process – when you know your next move, you are less likely to have second thoughts about our decision. And the more committed you are to the sales process, the better the outcome is likely to be. There is a lot to consider, which is why it’s good to have time on your side.
Timing is everything
Like with most deals, timing is everything when it comes to selling a business. Getting the timing right can mean the difference between seeing a big rise in value and the deal not going ahead. While no one can predict the future, there are steps you can take to make sure your business is in the best position possible at the time of sale.
That means putting in the time for tying up loose ends, cleaning up the books and getting a clear idea of the numbers. Maybe you need to sell off non-core activities or invest more in promoting the business brand. You only have one chance to make a good impression, so it’s key that you have everything in order. This may require a lot of time and energy, but ultimately, it will ensure that you are not caught out if there are any sudden market changes and that you get the best sales outcome possible.
Knowing when to bring in help
There is a lot to consider when deciding to sell a business and every sale process comes with its share of obstacles and challenges. Chances are that this is your first time, meaning you may not be aware of what is involved and what can go wrong. It is understandable that some business owners feel that they could and should sell their own businesses. After all, you know it inside and out, and have an excellent grasp of your industry. However, it is likely that you do not have the time, energy, connections or expertise that are required to put your company on the market and to identify the opportunities that will result in the best strategic M&A solution.
Partnering with an M&A expert can be beneficial in many ways. Firstly, having a team of advisors can help steer you away from any potential traps. There is a lot to consider when selling a business and the answers are not always clear. A good advisor will be able to spot any red flags. They will be able to identify the weaknesses of a deal, as well as anything in your own business that might affect the sales price.
What’s more, an M&A advisor specialized in preparing companies for sale will source good-fit buyers, interact with prospective purchasers, and negotiate on your behalf. They also know how to navigate bumps in the process and manage the expectations of all the parties involved.
Remember you still have a business to run
Selling your business is not a process that should be taken lightly. Countless decisions will need to be made. Consider the reality of what is going to be required and embrace the fact that you cannot shoulder the burden on your own. An M&A advisor can help take off some of the pressure. Remember you will still be in charge of the everyday running of your business, only now you will also be dealing with the process of preparing the company for sale – a phase that can take several years. Your business needs to be in the best possible shape in order to get the best offer, so you don’t want to be distracted by the sales process. An M&A advisor will manage the deal for you end-to-end, so you can continue to focus on running your business.
Selling a business is an exciting and complex process, and having the experience of experts can be very valuable. With a trusted team of advisors, you can get on with the work of managing your company, while also benefiting from their insight and expertise.
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Articles in this this six-part series on ‘Answering key questions when selling a business’:
1. Selling a business: How to get started