Today is that day!
Six key steps to selling your business
By Jerry Pape, Business Broker with Results Business Advisors
As a business owner you’ve spent years focusing on building your business, taking care of your customers and developing your employees. In the back of your mind, you knew that you would one day need to begin planning your exit. But that was always for another day since every day seemed to demand that you direct your time and energy toward running your successful business.
Well, today is that day! It’s time to begin investigating and understanding your options and just what the process of selling your business looks like.
Your employees are great and have helped you build a fantastic business. You want to take care of them, but none of them are interested in, or financially capable of buying you out. Or maybe your children worked in the business when they were young, but none of them are interested in taking over the family business either. Which leads you to the need to sell your business to a third party. But what does that look like and how does that happen?
While your CPA, attorney, financial advisor and insurance broker have all played an important role in assisting you in the growth of your business, you will now need to engage a new professional, a business broker, to lead and assist you in the process of selling your business.
Business brokers are consulting specialists that serve in various capacities throughout the business sale process. Successful business brokers come from many disciplines but have one trait in common, their sole focus is assisting you with the sale of your business. Just as you would only trust your cancer treatment to your oncologist, you should only trust the sale of your business to a specialized and singularly focused business broker.
There are six key steps in the process of selling your business, and your broker should be expected to lead you through each of them:
- VALUE – Analyze your business structure, financials and operations to determine a range of fair market value, and to offer advice on how to increase value and maximize your net sale proceeds. Experienced brokers take the time to understand your industry and economic conditions and then combine this with an understanding of buyer behaviors to assist you in establishing a list price which will attract qualified buyers and allow you to get maximum value for your business.
- MARKET – Professionally market your business, including both a rifle approach targeting others in your industry as well as financial investors, and a shotgun approach targeting buyers looking to own and operate their own business. A professional and well-managed marketing campaign is key to keeping your process moving along in a timely fashion.
- IDENTIFY – Not everyone who expresses interest in your business is a good buyer candidate, and your broker will lead you in identifying the qualified buyer candidates. A good buyer candidate comes with strong financial backing, related business experience (or plans to supplement their own experience by bringing in an operator), and an understanding of both the process of buying and successfully owning and operating a business.
- OFFER – Assistance in negotiating and structuring an acceptable offer and Letter of Intent (LOI) is a key step in the process of selling your business. Just as most business owners only sell a business once in their lifetime, most buyers only buy a business once. Your broker should be expected to assist a buyer in drafting a letter of intent, ensuring all key terms are identified up front, leaving little room for disagreements when it comes time to draft the final acquisition documents and close the deal.
- DILIGENCE – To successfully complete the sale of your business, once an LOI has been agreed to by both parties, your broker will need to assist the buyer with introductions to banks if they will need financing, providing due diligence checklists and explaining the process, and insuring they have engaged the services of a qualified CPA and M&A attorney to guide them through the final process.
- MEDIATE – Lastly, your broker will act as intermediary between all parties during the entire due diligence and legal document prep While most of the diligence is competed by the buyer, CPA’s and attorneys, the role of the broker is a critical one of intermediary, facilitating document sharing, ensuring all parties are staying on schedule, and getting to a successful and timely close.
Congratulations! You have now taken the first step to selling your business by educating yourself on the process. But having made that decision, letting go of your life’s work can still be a challenge. So, your next assignment is to screen, select and engage the best business broker available, one with the qualifications, reputation, proven processes & methodology to assist you in selling your business for maximum value, and ensuring its continued success.