Selling your business can be an emotional and life-changing event. On the “big day” of sale, hopefully, you may realize a once in a lifetime payoff. It could be that you have spent years building the business. Alternatively, your business could be a relatively new growing interactive business that you are cashing out.
Whether you are 27 or 67, it might be time to sell. If so, how should you do it? Please read on below for our advice.
• For starters, be realistic. Speak with number of experienced investment bankers / brokers to give you a sense of the value of your business. Some investment bankers may tell you a value that is unrealistically high. This could cause more harm than good when your expectations are unrealistic and you are unable to find a buyer.
• Second, do you have an accountant and attorney who know your business and know your industry? If so talk with your accountant and attorney, if not consider finding a new or supplemental professionals who are experienced in your industry and experienced in sales transactions. We see many situations where the accountant has been doing tax returns for years but does not understand the client’s business or industry.
We suggest that companies employ accountants, attorneys and bankers who have experience in your industry. They know you and your business and can give insight and guidance throughout this process. They know the investment bankers / brokers who serve your industry. They understand the legal and tax implications and might refer you to recommend a good investment banker or broker. For example, if you are a successful and growing new media company uses a banker who has experience selling new media companies. And if you are a community newspaper select a broker that typically sells community newspapers
• Third, think like a buyer. Potential buyers will want to see financial and market information. Anticipate the questions they might ask.
• Fourth, be flexible. Are you willing to assist the buyer with partial financing? Are you prepared to assist in the business for a time to insure a smooth transition? Beware however, if the buyer defaults on your financing, there may be no payoff and sometimes no opportunity to reclaim your business.
• Fifth, spruce things up. Work with an experienced CPA to make sure your financial statements are “scrubbed clean”. Help your investment banker / broker to prepare a package that informs and impresses. Make sure the information that you give potential buyers is correct and information that you are proud of.
• Six, think ahead. What will you do with your time and money after the business is sold, especially if you sign a non-compete agreement. Will you retire or move on to another business venture? Whether you are a 27 year old Internet entrepreneur or 65 years of age think through your decision before you begin the sales process. Make sure it feels right from both an emotional and financial perspective.
Selling your business is a seminal event in your lifetime. We have helped both buyers and sellers. Give us a call. We can help make sure you do it right.
IRS CIRCULAR 230 DISCLOSURE: To ensure compliance with Treasury Department regulations, we inform you that any U.S. federal tax advice contained in this correspondence (including any attachments) is not intended or written to be
used, and cannot be used for the purpose of (i) avoiding penalties that may be imposed under the U.S. Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein.