Are You Ready To Sell Your Business? Part 2

In part 1 of this article, we talked about the importance of building value in your business to prepare it for sale, whether that sale is to take place in the next year or maybe 10 or more years down the road. We also discussed why a business owner would want a valuation done - to get a true sense of what his or her business is worth. In part 2, we'll discuss how the economy and having the right mindset can impact the sale of your business.
The Economy
While doing a formal business valuation report, one must analyze the local and national economy at the time of valuation. However, to apply this to a potential sale, it is important to go a step further and plan on how the economy fits in to a specific sales process or company life cycle. Selling a company in a good economic environment often results in a better valued transaction, all other things being equal.
Industries vary and grow differently depending on the state of the economy. To orchestrate the most successful transaction for your company, it is important to be patient for the times that allow for better selling environments.
Firms are often called upon to help clients with strategic plans for the company to help them operate more efficiently in different economic environments. This results in illustrating lower risk to potential buyers due to the company's ability to weather potential economic storms. Consequently, the firms are also able to help plan a sale for a better economic time. The economy is always changing and it is important to make time your ally and not your enemy!
The Mindset
While the stars may align in terms of valuation and economy, it is important not to ignore the practical aspects of completing a transaction. Having the right mindset and being emotionally ready to sell require being in the right place so that the transition can occur. The soft characteristics are equally as important as the hard technical aspects, if not more so. These must come together to make the deal successful.
You may be needed to help transition the company to new owners, and the transaction may take longer than expected. And, if the transaction leads to retirement, how do you plan to spend your newfound time? It may be hard to leave the company that you have spent so long building. Being truly ready requires preparing yourself, preparing your employees and creating the right exit at the right time for a smooth transition benefiting both the buyer and seller. These aspects are often overlooked, and expertise in this process is often why we are hired. The technicalities of a transaction are only part of the whole selling process.
Having a successful sale is not difficult if you are doing the right things right to complete the sale in an orderly fashion. It is important to value correctly, pay attention to the economy, and watch out for the subjective characteristics to help the deal go through. Ultimately, a sale is about finding a buyer who matches what you are selling!
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