There are multiple reasons for selling a business. For some sellers, age, the approach of retirement, a sudden event such as illness, or simply the desire to do something else, lead them to consider selling their business.
A long process involving various steps
In this context, regardless of the reasons for selling, the process is complex and ideally should be the object of a planned approach. This requires a major investment of time and effort to obtain the best possible price and favour the company’s sustainability.
First question: Can I do it alone?
To carry out this process, you must consider several aspects involving specialists, such as business valuators, legal specialists, financiers, tax advisors and specialists in negotiation.
Second question: What is the value of the business?
Entrepreneurs usually know little about the value of their business. For many of them, the selling price of the business is based on the amount of money they want for their retirement. In this regard, a business valuation should be obtained before engaging in a selling process, so that a good basis for negotiation is established. Not only must the company’s assets be appraised, but its fair market value must be established.
Third question: What about taxes?
Tax planning related to the transaction is also essential. It needs to be planned methodically, because a shareholder who sells his company’s shares (and not the assets) has the right to a capital gains exemption of up to $800,000, if he meets certain very specific criteria. For entrepreneurs who want to sell their business so they can constitute their retirement fund, this tax benefit becomes especially important.
Fourth question: Have you established a communications and marketing strategy?
In the process of selling a business, communication is essential, both with the buyer and with the team in place within the business and the key employees. Special attention must be paid to the team in place within the business. Is there internal interest, or a risk of losing one or more key employees?
Fifth question: Can you control your emotions?
Entrepreneurs often have invested a large part of their lives in the business. They are involved both in human and financial terms. It is therefore completely normal to be emotionally involved when you consider divesting your life’s work.
But there is no place for emotionalism in the process of selling a business. For this reason, support to the seller by a person who has no interest in the business is very beneficial in such transactions.
Just as entrepreneurs are experts in their industry, entrepreneurs involved in a selling process should call on the best resources at their disposal. Ultimately, the wealth he needs to ensure his retirement is in question.