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 There
is a time when every privately owned business changes ownership.
It may be from the founder of the business to his son. Or it may
be transferred to a valued employee or group of employees. More
often it is sold to a total stranger.
If your business has been a
success (if it has not been successful, it most likely cannot be
sold) you've probably had to pour most of your time, energy and
money into it. You may see the company as an extension of
yourself and hard to imagine life without it.
On the other hand, your business
may have become an albatross around your neck which you can’t
wait to get rid of. Or, perhaps, you started or bought the
business with the idea that it would be a short-term opportunity
and that you would sell out whenever you got a decent offer.
Whatever your situation, selling
your business will be one of the most important things you’ll
ever do because, unlike virtually every other business decision
you've made, you’ll do this only once. You have a single
chance to benefit from possibly years of effort - and once you
sign the documents, it’s over.
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Key
issues you’ll need to think about:
- Do you
really want to sell? If you are not
really committed, the business is not likely to be
sold. “Testing the market” wastes everyone’s
time and risks legal consequences.
- Why do you
want to sell? A smart buyer will seek the
answer early on. If the business has hidden problems
that the owner will not or cannot correct, a
possible deal will be killed.
- Do you have
clean, comparable financial information for at least
the last three years? Tax returns should
be augmented by annual financial statements prepared
by a C.P.A.
- What is
your company worth? Few owners know what
their business is really worth. Or if they think
they know they may cite an inflated number, which
may not represent true fair market value.
- Should you
try to sell it yourself? A business owner
may be an excellent manager of his business but
possibly ill-equipped to handle the multiple
challenges of the business-selling process.
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