Over the next couple of blog posts, we will focus on two very important factors in selling your business. Before a business owner begins to offer the business for sale, we suggest taking steps to define your personal and financial goals from the transaction. Knowledge of these two key decisions will affect many aspects of the selling process as well as drive numerous considerations through the process.
This month’s post will help you evaluate the personal goals to consider when selling your business. Your specific personal goals will influence the structure of the transaction as well as the types of buyers that are approached. Of course, personal goals should also be accounted for in your financial goals, which we will cover next month.
Define Personal Goals
Naturally, every business owner has financial goals when selling a business. However, equally important are personal goals as they relate to the sale and its results. Defining these goals on the front-end of a sale will facilitate negotiations as well as reduce potential stress if these concerns are left unidentified.
A first consideration is the proper valuation of your business. Click here to review our earlier post discussing the importance of and methods to conduct a thorough valuation of your business.
Next, will you sell all or only a portion of the business? Some owners wish to maintain a controlling share in the business and sell only a fraction of ownership. This strategy may help the owner dilute risk and place her money in a less volatile asset, such as cash or equivalents.
At this point, and regardless of the size of the business for sale, we suggest adding a trusted wealth manager to the equation. This professional will help guide you through the preparation for selling while ensuring both your personal and financial goals are in sync. Your CPA should provide input in this discussion, as well.
Another crucial point of input at this stage of the process is your family. Have you involved your family in the decision to sell? Is your entire family prepared for all the ramifications resulting from a sale? For example, perhaps your family will need to budget more carefully. Or, how will your spouse and family deal with a great deal more personal time together?
While the possibilities are limitless, you should have some specific ideas of what your life will look like after selling your business. If you cannot describe what your post-sale life will look like, you may not be ready to sell your business; and you should question your decision to sell at this time.
Ultimately, the seller in any transaction must be prepared that a sale may or may not occur immediately. If the market does not reveal a buyer after a period of time, the seller may then choose to continue operations for a time and begin marketing the business for sale at a later date.
What Will the Business Look like after the Sale?
As a business seller, do you have any thoughts on the post-sale business? As indicated above, do you wish to retain a portion of ownership in the business? Do you wish to remain involved in the day-to-day operations of the business after the transaction? Another consideration may be whether current employees or management retain their positions once the sale is complete.
What Will Your Life Look like after the Sale?
When you consider exiting your business, how do you envision spending your days without the responsibilities involved in daily operations? Once your sale is complete, you will have more control over how you spend your time. That time may well be spent leading another business.
Personal Goals with Financial Goals Provide a Stronger Picture
As you consider the end of this portion of your career, it is important that you establish what your priorities will be after the sale of your business. As noted above, if you are unable to foresee our post-sale lifestyle, perhaps you are not truly prepared to sell.
With personal goals defined, it is time to prepare financial goals as well to ensure you are actually prepared to walk away when the sale is complete. Next month, we will concentrate on the importance of your financial goals in a sale.
With years of experience, Piedmont M&A Advisors has led countless business owners through the selling process. Many are now enjoying the post-sale life they imagined. Others have realized that their current desire is to remain in place and delay the sale for a time.
We are here to help your decision process. Our experience with others can serve as a useful guide as you move forward in your journey. Call us today at 404-719-4792 to engage our assistance.