So you have come to that point in your career of owning and operating a business that you feel it’s time to sell. You are ready to move onto the next stage of your life, but can it be done easily? Some sellers never reach that goal because their selling strategy didn’t include desired sale checkpoints and future plans.
The goal of a seller is attract buyers and get the best price for their companies. But it’s what comes after the deal is set that helps negotiate terms, mold your marketing skills, and execute the sale.
THE MANAGEMENT OF THE SALE
COMPETITION A buyer will want to protect the investment being made and require on a frequent basis that the seller won’t open a similar business within the same local market. This guarantee is achieved through a non-compete clause which basically a contract that prohibits the seller from directly competing with the buyer for a specific amount of time.
However if you are seeking employment at a company in the same field, a non-compete clause could potentially threaten your ability to make a living after the sell. This is definitely a consideration when signing documentation.
BUSINESS CONTINUITY Continuity of a business can be a concern for a seller who has deep, personal connections to it such as a family business. Even though your future plans may not include the business, the fruitfulness of the company, its employees or the next generation of family members can be become a major motivation.
It’s admirable to desire to have your family business thrive, but it may involve certain decisions that could put a damper on your next stage plans. For example, if you’re selling to a family member, they may expect seller financing or a below-market price. The same could be applied for employees as well.
INVOLVEMENT Involvement with your company after the sell is a possibility which comes as a surprise for many sellers. Often the buyer will want the seller to still be a part of company as a consultant or employee for a period of months or even years. If you desire to truly have a seperation from your business, make your intentions known to buyers early on in the process. However, advertising your involvement can be a point of leverage during negotiations if your future plans can allow it.
YOUR FINANCIAL POSITION Seller financing in the marketplace for selling businesses can be a problem for sellers want or need to pull in the full amount at the time of the sale. If it’s possible to delay a portion of the sale or if you’re retiring, it will make the sale more attractive to would be buyers. Seller financing may not be an option if your company is still financed or if you have a goal in mind to buy another business. To boost your company’s profile to buyers, preparations need to be made for the sale early on. This will help place your company in a spot to attract top level buyers who are capable of self financing or securing a third-party lender.
If selling your business is in your future, don’t take anything for granted. If you’re not sure how your future plans will affect the sale, consult a business broker or other professionals for guidance.