Top 10 Tips for Selling Your Business

Most of us have experienced the highs and lows that come with selling a home, from the initial decision to move, to having strangers trooping through the house, to the final closing. Chances are you'll go through that process a few times in your life. However, not many of us participate in the sale of our own business more than once. As an owner, businesses are often something you retire from.

Although there are signs that this is changing, as people are more inclined to make numerous career changes, I still find that business sales are usually once-in-a-lifetime events for most of my clients. And that means that many business owners are completely unprepared for what's involved in the sale process.

After all, you don't just stick a For Sale sign on the front lawn of your office building or plant. Selling a business is a long and complex process, requiring as many as 1,500 to 2,000 hours. There are many pitfalls - and that's why there is a growing trend to using business intermediaries to broker the deal.

Based on my 25 years of experience in helping people sell their businesses, here is a list of my Top 10 tips to help make the experience a positive one.

1. Be reasonable about the value of your business. Inflated expectations interfere with your business intermediary's ability to negotiate the best value for you.
2. Carry on business as usual. Don't become so obsessed with the transaction that you ignore the more day-to-day demands. Your eventual buyer will need to see a healthy business, not one suffering from neglect.
3. Keep the sale process strictly confidential. A breach of confidentiality surrounding the sale of a business can alter the transaction dramatically. Any potential purchaser looking at a business for prospective purchase must sign a confidentiality document. (A corporate lawyer can prepare such a document for you. You'll find samples of these on the Robbinex web site at www.robbinex.com)
4. Prepare for the sale well in advance. Be sure that your records are detailed and complete for at least the past few years and that you do all pertinent legal or accounting housecleaning as well as carry out a physical sprucing up of the plant or office.
5. Anticipate information the buyer may request. In order to obtain financing, the buyer will need appraisals on all assets, plus information to satisfy any environmental regulations that may apply.
6. Achieve the highest price through buyer competition. Since this can be tricky, you're advised to let your intermediary, as a third party, create a competitive situation with buyers to position you for the best transaction value.
7. Be flexible. Don't be the kind of seller who wants all cash at the closing, or who won't accept any contingent payments or an asset transaction. .
8. Negotiate, don't dominate. You may be used to being your own boss, but the buyer may be used to having his way too. With your intermediary's help, decide in advance when to hold and when to fold.
9. Keep time from dragging down the deal. Work with your intermediary, your accountant, your lawyer and any other experts who may be required to be sure that potential buyers stay on a time schedule and that offers move in a timely fashion.
10. Be willing to stay involved. Even if the process has been exhausting, realize that the buyer may want you to stay within arm's reach for a while. Consult with your intermediary to determine how you can best achieve a smooth transition from owner to past owner.

Above all, remember that planning ahead is key. I find that too many business owners fail to plan for the day when they will want to sell. Then something happens - most often a health problem - and they are forced to sell quickly. Rushing to sell can result in a failure to recoup the true value of the business. The best time to sell is when you don't have to.

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