Selling Your Company - A Checklist For Business Owners

Selling your company requires the same type of planning and commitment that starting your company required - except that there is more at stake. Don't leave your exit to chance. Begin planning now to maximize your chances of success. This short, step-by-step guide will help you get started.

Step 1: Define your Exit Objectives. 

• How much money do you need after the sale to achieve your financial goals?
• When do you want to exit?
• What kind of buyer do you prefer to sell to: a third party or insiders (employees, your management team, family)?

Step 2: Get an objective, professional valuation of your business. This will determine if a successful exit is feasible, and in what time frame. A professional valuation will also identify the value-reducing weaknesses of your company.

Step 3: Prepare your company for your departure. This typically involves building a management team and focusing on the business value drivers necessary to meet your financial goals. NOTE: This step may require you to continue running your company for a while and to make some big changes. Too many business owners wait until they’re burned out, ready to retire or forced to rush by some unexpected event. Give yourself plenty of time by beginning your plan long before you actually want to sell!

Step 4: Initiate the sale process. The sale process doesn’t begin with “selling”, it begins with pre-sale due diligence and market research to identify potential suitors.The more prepared you are the more likely you are to achieve a successful exit.

Most owners sell to a third-party for several reasons:

• A third-party sale can be accomplished in less time.
• When the market is strong and strategic buyers are active, a third-party sale is yields the best price.
• An insider sale is often riskier and more complicated. Insiders such as co-owners, employees or the owner’s family often don’t have the money or the ambition to buy the company. If an insider sale is a real option, there are several ways to reduce risks associated with transferring your company to key employees.

We recommend these steps:

1) Find an exit advisor who can explain the process clearly and realistically and help you plan. Read as much as you can find on the exit planning and business sale process. 

2) Begin assembling a deal team including the right merger and acquisition advisor, an attorney who understands business sale transactions and an accountant who understands tax minimization techniques. These advisors will cost money in the short-term, but if you choose wisely, they’ll make you much more money in the long-term by:

• Helping you avoid the most common deal pitfalls.
• Minimizing the tax consequences of the deal.
• Developing a marketing strategy to engage the right potential buyers at the right time.
• Develop a sale process that allows you to focus on running the company with minimum disruption while potential buyers are engaged and a deal is negotiated.

3) Create a written plan and work that plan, with the help of your advisors, until you are able to sell your company to the buyer you choose for the money you need.

Conclusion

Selling your company is likely to be one of the most challenging and life-altering endeavors of your career. Success requires planning, effort and discipline - the same attributes that made you a successful business owner in the first place. The sooner you begin planning and building your advisory team the more likely you are to sell for maximum value, when you want to and to the buyer of your choosing. 

About Venture 7 Advisors

Venture 7 Advisors was built from the ground up to help business owners grow and successfully exit their companies. We think like business owners because we are business owners. We offer practical business advice on our website and here on LinkedIn. We encourage business owners to Contact us for a free brainstorming session. No sales pitch, just business ideas and support from experienced owners like you.