Sooner or Later, You'll Sell Your Business
Sooner or later most business owners think about selling their business. Sounds easy enough. Stick a price on it… talk to a few people... buyers will come out of the woodwork and the deal is done. No problem. Time to relax.
If only it were that easy!
The first issue you encounter is, “How much is my business worth?” Ask too much and you get no interest. Ask too little and you leave money on the table. So how much is your business worth and what price do you put on it? That is not an easy question to answer!
There are other issues. Interested parties show up and want to kick the tires a bit.
Ok, so you talk to your brother-in-law and he tells you he heard of someone who was asking $1M for his business and it was not nearly as great as yours. That sounds good to you so you decide to ask $1M. Of course your business might be worth a lot more, or a lot less!
Now it is time to start to market the business. You decide to talk to a few friends and “let it be known around town” that you are interested in selling. But wait...what if you don’t want everyone to know? How will your employees react? Will they all start to leave? What about your customers? Will they start looking to do business with your competitors? And what if you don’t find anyone interested? Now what?
Or... what if you are fortunate to find a bunch of people who seem interested? Now what? They start asking questions like, “What are your sales?” “What are your profits?” Are you really sure you want to share this private and confidential information? And what do you prepare to show this data to people in the first place?
There are other issues. Interested parties show up and want to kick the tires a bit. Then you discover that this all takes time. And, how do you even know if the people are capable of buying the business in the first place? Many may be interested, but few will actually have the ability to purchase the business. And a few may not even be legitimate parties--they could be scoping you out for the competition! How do you screen out all the unqualified buyers?
This entire process takes time, and time is really precious to you. After all, you still have a business to run! Do you really have time to run the business and sell it successfully at top dollar? And what if you are not so fortunate? What if all those potential buyers don’t materialize? Perhaps you should consider hiring a professional business broker to help:
Price the business properly.
Market the business in a way that both gets top dollar for you and protects your confidentiality.
Proactively seek and qualify buyers.
Navigate the deal structure so that both buyer and seller are protected and satisfied.
In the end, most business owners will find they will get more money with less time and effort on their part by seeking the help of a professional business broker.
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The information contained in this article is general in nature and is not legal, tax or financial advice. For information regarding your particular situation, contact an attorney or a tax or financial advisor. The information in this newsletter is provided with the understanding that it does not render legal, accounting, tax or financial advice. In specific cases, clients should consult their legal, accounting, tax or financial advisor. This article is not intended to give advice or to represent our firm as being qualified to give advice in all areas of professional services. Exit Planning is a discipline that typically requires the collaboration of multiple professional advisors. To the extent that our firm does not have the expertise required on a particular matter, we will always work closely with you to help you gain access to the resources and professional advice that you need.
Any examples provided are hypothetical and for illustrative purposes only. Examples include fictitious names and do not represent any particular person or entity.
This is an article originally published by Miller Slaughter, and presented to you by our firm. We appreciate your interest.