Plan Ahead to Sell Your Business

Selling your business can be a very emotional process. Countless hours and tremendous effort go into building a business, then one day, it is time to sell. It is easier for serial entrepreneurs to deal with closing day than it is for someone who has been in a business from start-up 25 years ago. Being prepared to sell involves a fairly objective viewpoint along with a plan for the future.

There is a great deal of advice coming from many directions once you begin to look into what is involved in the sale, and most likely, some conflicting advice to wade through. Do you really need 3-5 years to plan your exit? That depends on the state of your business right now. If you are ready to let go, have clean, up-to-date books, systems and procedures in place and your business is making money, it is time to call a good business broker and get the ball rolling with a confidential consultation and appraisal.

If, on the other hand, your books are full of expenses not directly related to your business, or your books consist of a shoebox full of receipts, your systems and procedures aren’t solidly laid out and your business is not profitable, it would indeed be wise to spend a few years getting things in order. Initially, consider having an appraisal done so you know where you stand and where you need to go.

Your reason for selling can be the primary driver for your timing for selling. You may not be willing to invest 3-5 more years. You may want to get out as soon as possible due to sudden health issues, boredom, stress, partnership disputes or family reasons. In the case of a motivated sale, a broker will do his or her best to highlight the existing value and obtain the best price possible, while ensuring that your business is matched with the right buyer.

The next few years will see a rise in the number of business owners exiting due to retirement. If you have plans to retire in the next year or two, now is the time to prepare your business, if you haven’t already. Find a reputable broker you trust who has access to a large network and ask them to do an appraisal in order to determine your most probable selling price. The sooner you know that, the better. An educated and experienced broker should give you a suggested price that can be fully defended in the marketplace. This may be higher or lower than your expectations and you should seek a full understanding of the appraisal value before making any commitments.

Now you can decide to engage the services of the broker to market your business, or you can decide to build more value into your business and call back when you think it’s ready. An honest broker will encourage you to do what is best for you and your business and will encourage you to discuss your concerns with your professional advisors.

Something to keep in mind is confidentiality. Your business will be better off if you keep your selling plans to yourself until closing day so as not to alarm your staff, clients or suppliers. Your business broker’s responsibility is to maintain confidentiality and market your business in such a way that it is not recognizable in the listings, carefully screening buyers before divulging further details, and ensuring that your business suffers the fewest disruptions possible throughout the sale process.

When you sign the engagement agreement, you should be comfortable with the asking price, realistic about the time it may take to sell (6-9 months on average), and willing to maintain, if not build, the value of your business. Also, you should have a clear plan for life after closing. There will most likely be a transition period in which you commit to train the buyer, but after that, what will you do?

Even if your business is in tip-top shape and prime for the market, take some time to consider your future and be confident that you are ready to sell.

2009 Heather Loewen

Selling your business can be a very emotional process. Countless hours and tremendous effort go into building a business, then one day, it is time to sell. Your reason for selling can be the primary driver for your timing for selling. The next few years will see a rise in the number of business owners exiting due to retirement. If you have plans to retire in the next year or two, now is the time to prepare your business, if you haven’t already.

Heather Loewen is with Sunbelt Business Brokers Pacific (http://www.sunbeltpacific.ca) in Southern British Columbia. mailto:hloewen@sunbeltpacific.ca

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