Baby Boomers Deciding to Sell Your Business

If you have decided to sell your business, you are probably a Baby Boomer. Baby Boomers own approximately 2/3 of the 12 million businesses in the United States and many are looking at retirement soon.

So, you own a business and have built a very successful enterprise that will be attractive to buyers and you are ready to sell, but are you?? Many small business owners mistake the knowledge they have accrued running their business as giving them insight into selling that company, which is a very different process.

The following are a few mistakes that many business owners make when they decide to sell.

1.??? Overpricing

a.????? You are probably proud of your business and what you have accomplished but when it comes to determining a listing price, look at what your business worth objectively. Don’t listen to your enter circle of friends, other business owners and even your CPA/Accountant that don’t understand the value of your business in the current market.

b.???? You need an objective third-party valuation. An outside expert that understands the current market and can provide research on the sales of businesses in the industry in your area for comparison.

c.????? When you do decide to sell and have buyers looking at your business, you will need to show them the value and not stretch the truth. There is a saying; “Your business is only worth what a buyer will pay for it”. ?Not very few buyers that will overpay for a business. Remember he business will have to generate enough to pay their debt service and still provide a reasonable income for them.

?

2.??? Lack of Preparation

a.????? Another error many business owners make is not having all their financial documentation in order. It is one of the biggest reasons owners need help selling their business at the best value. Good books sell a business. Be sure to properly prepare the business for sale, whether that means physical improvements / first impressions or dealing with staff issues. Buyers don’t like businesses that are over dependent on the owners.

b.???? Also, even though you may be leaving the company or passing it on, that doesn’t mean you should wind down your business, causing profits to fall, before you sell. A valuation will be based on current earnings, not past or potential earnings. Even if you aren’t thinking of selling, it’s a good idea to have a plan in place should an involuntary need to exit arise, like death, divorce, disability, distress, or disagreement.

?

3.??? Plan for After the Sale

a.????? Start by making sure you are ready to sell. You may need to wait if you aren’t fully committed to moving on. Next, think long and hard about your vision for your next stage. It would help if you had a framework for what you want to do after the sale, so you aren’t floundering.

?

4.??? Walking Away from a Good Deal

a.????? A good deal may not be perfect, so it’s imperative to be open to all offers, including deferred payments, seller financing or help obtaining third-party loans. You want to find multiple qualified prospects before starting serious negotiations to help you maximize your sales price. However, it’s essential to recognize that, more often than not, the first offer you receive is likely to be the best offer you will get. Consider it carefully.

?

5.??? Not Seeking Help

a.????? Finally, don’t sell your business without help. Look for and vet the necessary professionals, including accountant, business broker and lawyer, to help you manage this complicated process. In terms of a professional broker, you want to find a business advisor that is preferably a Certified Business Intermediary (CBI) who can confidentially help market your business and vet potential buyers.

b.???? While you want to let the broker do their job, you still should stay involved with the sale to be aware of progress. But until you sign on the dotted line, your primary focus should be running your business to keep it healthy and viable.

For more insight:

Mike Limbers, CBI

[email protected]

Transworld Business Advisors