Who Will Sell Your Business When You’re Ready to Go

Who Will Sell Your Business When You're Ready to Go

By
Joan Ridley, CEPA, CBI, CFP™

Some day you will leave your business. That's a fact. If you are the type of person who needs to be in control, you have already decided how and when you will sell and who will represent you in the transaction. Or maybe you have a buyer in mind that you plan to approach on your own. No matter which camp you are in, here are some points to consider.

One Buyer is No Buyer

You have probably heard that "one buyer is no buyer". If you have one buyer, he (or that entity) will drag out the process, wearing you down until you are willing to agree to his terms. You would be wise to retain a mergers and acquisitions professional to identify at least two qualified, potential buyers. He will run an auction between the serious suitors. The result is all suitors will be forced to offer their best price and terms. You win.

Why not Approach a Potential Buyer on Your Own

If you approach someone who you think might be interested, you will be at a disadvantage when you negotiate. Negotiating on your own behalf is not likely to turn out in your favor. You will only get once chance to get this right. An experienced intermediary is well worth the fee because you will sell for far more than you would have without his services, and, for more favorable terms.

There is More to an Agreement Than Price

Right now you might be focused on the price you would sell for. But what about all of the other terms: reps, warranties, taxes (there are several categories), escrows, earn-outs, non-competes, your post-sale employment agreement, the complexities of deal financing and structure, and lots more. It's not what you sell for, but what you close for that really matters. Even more important is what you walk away with after all fees and taxes. And, even though your Intermediary cannot give you tax or legal advice, he understands all of these issues and can communicate with the tax advisor and attorney with your best interest in mind.

How and Where to Find the Best Buyers

It's the job of the intermediary to know how to search for and present your business in the best light to qualified buyers. M&A firms know who would be interested in your business and how to approach those likely buyers. The best use of your time is to continue to run your business, making sure that revenues, operations, and profits remain optimum.

Not all Intermediaries are the Same

Finding the right intermediary to represent you and your business is not so easy. You have a lot riding on making the right decision. Not all intermediaries have a well-developed database of financial and strategic buyers, private equity groups, and other potentially interested parties who can work with your intermediary to develop creative solutions. Take your time to find the right fit. You don't want your business to sit in somebody's in-box, or, for your sale to result in less than you had hoped for. A pleasant personality is desirable, but there is so much more to consider before engaging someone to represent you in the largest and most important transaction of your life. Start the process early as it could take longer than you think to put the business in play and get it to closing. We can help you connect with the right intermediary when you are ready. Give us a call at 214-692-9192 to discuss your time frame and how we can help. Visit our website at www.bwsllc.net.

Joan M. Ridley is President of Business Wealth Solutions, a business consultancy that helps business owners maximize enterprise value. She is a Certified Business Intermediary, Certified Business Exit Planner, and a Certified Financial Planner™. In 2013 she received the first Excellence in Exit Planning Award conferred by the Exit Planning Institute for her pioneering contribution to this new discipline. She is the Founder of the North Texas Chapter of The Exit Planning Institute. Call 214-692-9192 and visit www.bwsllc.net.