By Winmark Business Solutions
If your business has been a success, you’ve probably had to pour most of your time, energy, and money into it for what may seem like forever. You may see your company as an extension of yourself, and it may be hard to even imagine life without it. In some cases your entire family may have depended on the business, discussed it endlessly around the dinner table, used it as an education and a proving ground for the children and practically made it into another family member!
On the other hand, your business may have been only marginally successful and something you can’t wait to get rid of. Or, perhaps you entered into the business with the idea that it would be a short-term opportunity and that you’d sell out whenever you got a decent offer.
Whatever your situation, selling your business will be one of the most important things you’ll ever do, because unlike virtually every other business decision you’ve made over the years, you’ll only do this once. You get a single chance to put a price tag on possibly years and years of effort — and once you sign the sales documents, it’s over.
You’ll come out way ahead, both financially and personally, if you make an effort to understand the steps in selling, formulate your plan carefully with the help of your professional advisors, and, when the time comes, take the time to negotiate a price and terms that satisfy your reasons for getting out of the business.
Even if you think you’re many years away from selling out, you should consider what your heirs or successors would have to do if you died unexpectedly. If you don’t have a workable exit strategy in place, you (or your heirs) may have no choice but to liquidate the business and sell off the assets piecemeal, getting nothing for the goodwill you’ve built up over the course of the years.
Here are the major issues you need to think about when it’s time to sell your business:
- Initial issues in selling out: how should you time your decision and choose experts to help, and what legal/ethical pitfalls do you need to avoid?
- Valuations of small businesses: how does the market put a price on a small business, and what can you do to maximize your own business’s value?
- Finding a buyer: what do you need to know about working with a business broker, creating a selling memorandum, and other marketing concerns?
- Structuring the deal: what are your options as to terms, paying particular attention to the tax implications of various alternatives?
- Financing the deal: what should you know about seller financing, and third-party financing through leveraged buyouts?
- Completing the deal: from the Letter of Intent through due diligence to the closing, what are the typical steps you can expect to go through in the sales process?
- After the sale: we add a few notes about your new, unencumbered life!
About the Author
Winmark Business Solutions (WBS) is a free Web site for small businesses and entrepreneurs containing over 6,000 pages of business-critical information and downloadable tools at www.WBSonline.com. WBS is a division of Winmark Corporation, a multi-brand franchisor with nearly 900 franchise locations in North America. With over 25 years working with small businesses, WBS draws upon years of experience to bring important small business articles, information, tools, forms, checklists, calculators and downloadable forms to the small business owner to help their business grow. WBS contains over 6000 pages of business-critical information all available at www.WBSonline.com.