Selling your Business
Timing Your Sale
The decision to sell your business is a personal decision. A forced sale will result in receiving a lower value for your business. Do not wait until you have no choice but to sell. Take an objective look at your situation and begin sales proceedings at least eight months to one year ahead of time.
The following are some questions you should ask yourself when considering selling a business:
- Are you approaching normal retirement age?
- Has your health begun to deteriorate?
- Do you no longer feel challenged by your business?
- Are you becoming burned out?
- Are you in the midst of a divorce?
- Is there an heir apparent in the business? Can your son, daughter, or favored employee take over?
If one or more of these questions apply to you, then you should proceed with the sale of your business.
If you can time your business sale to coincide with an economic growth period in your industry when buyers out number sellers and will pay premium price, you will most likely receive the best price.
In addition, if a buyer suddenly appears who needs your business for a unique reason, such as synergy with his company, to capture a specific market segment, or to buy market shares in your area, you may be able to negotiate a premium price.
The following questions gauge the climate for selling your business:
- Is the stock market rising?
- Has your type of business suddenly become a “trendy” business?
- Is your type of business reaching a new high in sales and profits?
- Is your business doing exceptionally well compared to other businesses?
- Is your business at or nearing a peak?
Be a smarter seller. Recognize that market conditions, as well as your own personal reasons for selling, will affect the price you receive for your business.
Create a Business Exit Plan
Your business is thriving and you expect an even better year next year. The future looks good. In fact, you are having so much fun, you cannot ever imagine leaving your business.
Now is the time to think about an exit plan. Every business should have an exit plan for the owner, and the best time to plan for the leave-taking is when both the business and the owner are healthy.
An exit plan is important for three reasons:
- You may be able to enhance your business’s value if you time the sale of your business correctly.
- You should plan for management succession, either through a competent employee or your son/daughter, if you do not sell the business.
- You will want to make personal plans for your future after leaving the business.
Preparing yourself to leave
Plan your exit from the business now
Decide what your goal will be and work toward it so that you can enjoy your retirement before ill health or other factors force it on you.
Although it is important to prepare your business for the sale, it is even more important to prepare yourself psychologically. Become involved with hobbies or other outside interests. Do not focus all your energies on your business.
At retirement, plan to discover those other interests that you will now have the time to pursue.
Learn to look at your business objectively. You may derive a great deal of personal satisfaction from your business, but your personal goal should be to increase your own net worth.