The Apex Guide for First-Time Business Sellers

While there’s understandably a lot of publicity around entrepreneurs who have multiple exits, the vast majority of business owners buy and sell (or build and sell) one business. As such, they need to make sure they take as much care exiting these endeavors as they took building and scaling them.

Start with Why

We ask this question frequently, across all sorts of aspects of the deals we do. Perfectly valid answers for “why are you selling your business” include:

• Retirement. You’ve put in a good shift, maybe even a few decades, building a business. It’s time to rest.
• Burnout. We see this more often than you might expect: people pushing themselves too hard for too long, not taking time to recharge their batteries. Those batteries are finally dead.
• Boredom. Whatever used to be exciting and engaging about the business isn’t anymore. Sometimes we even see sellers who really don’t like what they do anymore, for any number of reasons.
• Pursuit of something else. The flipside of boredom can be the desire to work on something new, whether it be a different industry or a different skill set.
• Market change. Legislation or technological innovation can make what was a fairly straightforward business more challenging, and some sellers are past the time in their lives when they can go through the grind of adaptation.
• Health or personal issues. Personal or family health issues can force an unexpected exit. This is somewhat uncontrollable, but it happens more often than you would think. Very often, we even get calls from executors of estates, calling to find out if we can sell a business that the now-deceased seller never made contingency plans for selling.
• No clear succession. We see this most frequently with family businesses, when there is no one who has the skills to run the business, though some family members would be happy to continue to work in the business.

“Why are they selling?” is almost always the first question that buyers ask, so you should have a good answer. None of the answers above are in and of themselves “bad” answers, but the business should still be in a relatively healthy position, whatever your answer may be.

What’s Next?

Some people have big projects or personal travel lined up for their exit. Some have endless time with grandkids already booked in. There’s no right answer, but the wrong answer to what you will do after your business is “nothing.”

If you know what you’re going to do next, you’ll maintain mental health and overall satisfaction with your exit. If you don’t know, you can suffer from an identity or purpose vacuum, and might be plagued with depression, boredom, and regret.

Who’s on Your Team

If you’re getting ready to sell, check with the key players you’ll need for this exit, namely:

• Attorney
• Accountant
• Fiduciary
• Advisor (that’s us!)

We are going to help you get the most from this sale, financially and emotionally.

Know Your Value

We’ve covered this topic many times and in many ways in these articles. Once you’ve received a proper valuation of your business, reflect on how it aligns with your wants and needs. You might be right at the valuation you want, you might have slightly more than you expected, or you might be quite a bit below what you were hoping for. In the last case, you’ll have to assess whether you are willing to stay in longer to get to the value you want/need, or if you’re going to cut your losses and go to market with the value of the business today.

Prepare for Exit

Without breaking confidentiality or being obvious, check in with your key vendors and employees and make sure they are going to be there no matter who signs the checks.

If you don’t already have updated financials and inventory and access to your timely-filed tax returns, get those together. Then start putting together (if you don’t have it already) a “what if something happened to me” file, which includes insurance policies, passwords, safe combinations, etc.

Choose the Best Buyer

Beware…the highest-bidding buyer isn’t always the best one to carry on your work and legacy. Just as you would want to think about cultural fit when you yourself would be buying a business, think about looking at buyers who have the best chance at building on what you’ve already done and taking the company to the next level.

Do you want help with this process? Contact us today.