How Do I Sell My Business?
What are the most important things you need to ask first
This question – How Do I Sell My Business? – is a question that almost all business owners will ask themselves someday, unless they plan to pass it down to a family member or they are forced to close the doors. This is a huge step and the very beginning of a journey so you have to make sure that you are asking and answering the right questions.
The first question you have to ask is:
Can I sell my business?
Not all businesses can be sold. Some businesses are losing too much money and cannot be saved, some are one man shops with no value without the owner, some have too much baggage (lawsuits, issues, etc), and there are many more. Ask yourself this first, would YOU buy your business if it was for sale? If not, you have a couple of options – get it to the point where it CAN be sold, or close the doors.
RECOMMENDATION: Speak to a professional buyer or broker before making this decision.
Should I sell my business?
This is a more personal question, but it will boil down to where you are in your life and business. If you are just bored of it, tired of it, or sick of it, you will probably be better off selling sooner rather than later after things have started to go badly due to your lack of interest.
Or maybe you feel like you have taken it as far as it can go and somebody else can take it to the next level better than you can. This is actually pretty common. We all only have a limited number of skills so not everyone is capable of building a multi billion dollar business. And not every business is capable of growing that large either.
Ultimately, this will be a personal choice.
RECOMMENDATION: If you are ready to sell, try to do it quickly before the business begins to suffer.
When should I sell my business?
This is a little more complicated due to various seasonal issues, but ultimately, it ties into the point above. When you are ready to sell, you should sell as soon as possible so the business does not suffer from lack of energy and attention.
It is natural to lose some enthusiasm for your business once you have decided to sell. Just try to keep it from hurting your business.
Why should I sell my business?
This is an interesting one here. People sell for lots of reasons – medical, family, retirement, boredom, ready to move on, out of ideas, frustrated, etc. There is no right or wrong answer here, but being aware of the reason can help you stay focused on what is important.
The really important question here for you is going to be the question below:
What is most important to you?
Do you want to make sure you get the most cash you can, close as fast as possible, or maybe you want to find the best fit? It could be any number of things like:
Your company is well taken care of
Making sure employees (all or some) are cared for properly
Maximum Cash right now
Max cash, but over time is fine (could reduce the taxes too)
Best buyer for your vision of your company
Just want to close as soon as possible with as little training as possible
Again, could be any number of these things – there is no right or wrong answer but you should make sure you answer these questions so that you can focus on the right buyers early.
What do I need to do to sell my business?
You MUST make sure that your company and employees are protected with the proper NDAs and any other legal protections to ensure that prospective buyers do not just steal your ideas/model/employees and go do it themselves. Regardless of how you sell, this is vital.
How Should I sell my Business?
You have three basic options:
You can sell it yourself, through an intermediary (accountant, lawyer, etc), or through a professional intermediary (aka, business broker).
Each of these will have their own advantages and disadvantages.
Selling it yourself is really only an option if you know someone who might want to buy it already. If that is the case, you should reach out to them first. This could be a Vendor, Competitor, friend, or someone who has expressed interest in it in the past. The danger of selling to someone who is in the same or similar field, is that they may have to remove some redundancies (employees) in your business.
Most business owners want to make sure that most if not all of their employees are treated fairly and taken care of after they have sold so these may present problems.
Your accountant or attorney may have a network of people with similar interests or with potential buyers that they can introduce you to. Make sure that you cover yourself and your business with the proper NDA upfront to avoid any issues.
You can also use a Broker. Brokers can be helpful by putting together the material, a marketing package, and posting ads while protecting your anonymity. They can also be expensive, uninformed, and block interested parties. Make sure, if you do choose to use a broker, that you choose one that will not try to inflate the price to pay their fee and knows you and your business. Ideally, they will not charge upfront, though some do. Choose wisely either way.
RECOMMENDATION: Reach out to us first to see if we might be interested or have other buyers who are interested.
However, whenever or whatever you do, make sure to protect your business first and foremost.
We will be happy to provide any guidance or direction we can, if that will help.
February 25, 2020
February 18, 2020