The Perfect Sale
By Robert A. Kent, Sr.
Certified Business Intermediary
Whether it's because of declining revenue, health problems, or other circumstances, your reason for selling your business must be clear and well-defined. Selling your business is an important decision that will require a lot of thought and preparation. Few business owners start a new business with an exit strategy; however, at some point and well in advance of marketing your business for sale, you must consider a plan to exit. A prospective buyer, being naturally cautious and curious, will certainly want to know why you are selling and also what you intend to do after the sale. A poor economic climate or a personal emotional dilemma may cause you to accept a deal that is not in your best interest. Thus it is important to market your business for sale at a time when you are not under pressure to sell.
Most prospective buyers look carefully at cash flow when considering a business to purchase. It will be important that your business is priced appropriately. In today's economic environment many business owners find that seller financing can greatly influence not only the ultimate selling price, but also the success of the sale itself. That is reason enough to consult with experienced professionals such as your CPA, attorney, personal financial advisor, and business intermediary.
Confidentiality will be emphasized by the professional who works on your behalf to find a qualified buyer, just as you would need to maintain confidentiality about a pending sale as you go about your day-to-day business operations. When you decide to engage a professional to help guide you through the process of marketing and selling your business, you agree to become part of a team effort to make the sale happen. The professional will encourage you to look at your business as if you were a potential buyer, helping you determine what you may need to work on to improve a first impression.
Once you have defined your objectives for selling, you will also need to gather the information necessary to facilitate the marketing and divestiture process. Profit-and-loss statements, income tax returns, lease and franchise agreements, and complete lists of business assets, loan amounts, and payment schedules are all pre-requisites for the selling process.
As you navigate through the process of divestiture, keep your equipment in top condition and spruce up the exterior and interior of your facility, just as if you were selling your house. Maintain normal operating hours for your business, and remove any superfluous items from the facility that are not included in the sale.
To secure the best deal, you must demonstrate flexibility, understanding, and patience. The right buyer may be better than a higher price. No doubt you have spent many years building your business and you will certainly want it to continue to be successful. More importantly, you must engage a seasoned professional for the best possible result. To paraphrase David Gumpert, former associate editor for the Harvard Business Review, experienced professionals know the necessity for a certain amount of risk in negotiations, whereas inexperienced professionals are often reluctant to advise their clients to take any risks at all.
A successful deal is created when the transaction represents a win-win in which all parties involved walk away happy. The buyer has acquired a business which will hopefully provide him with a foundation for future success, and the seller has acquired a reasonable profit as well as a newfound sense of freedom. In nature, the collision of two storms often results in "the perfect storm". In business, the perfect outcome requires three entities: a motivated seller, an eager buyer, and an experienced professional. When all three are in concert, with each acting in the best interest of the other, you have "the perfect sale".