Are you ready to sell your business? Regardless of your circumstances and motivations for selling, there are personal and financial factors that should be considered before you initiate the sale process. Our first in a series of posts highlights some of the questions you should be asking yourself.
Perhaps you’ve been thinking about selling your business for some time. Your motivations might range from a desire to retire or pursue other opportunities, the need to raise money for other business ventures or personal reasons, to a lack of interest or ability to continue running the business. You may have been approached by a buyer, either formally or informally. Alternatively, you may frequently be contacted by investment bankers, private equity funds, or others that purport to represent a buyer whose research has indicated that your business meets their criteria.
Regardless of the circumstances, every business owner eventually faces the question, “Should I sell my business?”. If the answer is yes, the next question invariably becomes, “Is now the right time?”. Assessing your personal readiness for a transaction is crucial in answering this question. While there is no one-size-fits-all answer, the best time to sell arises when both you and your business are prepared for the transition.
Assessing whether you are personally ready to sell is a process that requires you to consider a range of emotional and financial factors, including but not limited to:
- Have you considered life after a sale?
- Do you want to continue working in the company or industry, or are you ready to walk away?
- Have you made any promises that could impact your strategy?
- Have you done any tax or estate planning?
- Do you know what your business is worth?
- Will you have enough personal wealth after the sale such that you can afford to no longer enjoy the income and other perks that the business affords you?
- Have you thought about your legacy?
- If you have partners, are your goals and objectives aligned?
- Are you ready to undertake the rigors of the sale process?
Open and honest addressing of questions is essential, yielding significant dividends in pursuit of goals. Before initiating the sale process, ensure a clear understanding of personal aspirations. This helps avoid protracted negotiations and, in the worst case, the failure of a transaction.
While personal preparedness is critical, ensuring your business is sale-ready is of equal importance. Favorable market conditions and promising future prospects enhance the likelihood of finding a buyer and negotiating favorable terms. However, countless financial, operational, and administrative factors require attention before formally “going to market”. Proper planning and sufficient time to address key issues can help the business avoid many foreseeable obstacles that may delay or derail a sale. We will explore these issues in greater detail in our next post.
For other related content now, check out the following prior posts!