Many business owners pick a time or point in life to sell their businesses. When that time finally arrives, it may be smart to re-assess the facts to be sure it still makes sense.
- *When you have a good business that has not consumed you and allows you to have a life, and provides a good income; and you remain in good health, with no looming major challenges coming at you, pause for a moment.
- Consider whether, if the proceeds from the sale of your business were invested, will the income at current return rate will enable you to maintain the lifestyle you have become accustomed to.
- Consider how waiting a few more years might allow you to pay off the rest of any outstanding bank obligations, which will increase your net gain with the sale of your business.
- Ask yourself whether the business is generally enjoyable and does not create any abnormal stress.
- Think about hiring a middle manager to allow you to take long vacations or enjoy a shorter work week while still enjoying the income stream from the business. Having middle management will also increase the intrinsic value of the business. Buyers like see middle management because it suggests that the business can run on automatic pilot when the original owner leaves.
- Consider the lack of passive investments available in the market, and how little interest income you can earn while preserving the capital as the highest priority.
- Speak to a professional business broker/intermediary to get a sense of a reasonable expectation of what you could expect to sell the business for. Many times, the value a seller has in mind has nothing to do with the real world. When seeking this advice, it is important to be deal with a straight-talking person who will not tell you what you want to hear, but will be realistic.
Even with knowing and considering all these facts, sometimes a business owner just doesn’t want the responsibility any more and wants to be free, with no daily commitments. That is okay – you have earned it.
Whether you are considering selling now or in a few years, talk with a licensed real estate broker who does only business brokerage to understand the value drivers that will allow you to get the best price possible. A few examples are stable or increasing sales, no customer concentration, all W-2 employees, and clean accounting records.
Understand what will take away value from the business, such as poor accounting records with high numbers of “add-backs,” declining sales or no middle management, to name a few.
As a seller or a buyer, if you would like a confidential conversation about how to prepare, please contact me on my cell, 954-579-4687, or by e-mail at firstname.lastname@example.org. My LinkedIn profile is: http://www.linkedin.com/in/dolansales.