Why do you want to sell? What plans do you have for the future? Are you ready to let go? These are all questions that you should be asking yourself long before you start attracting the interest of potential buyers.
There can be a number of reasons why you would want to sell. Maybe you want to spend more time with your family, have more time to yourself and travel the world, or you might simply want to put money in the bank. Considering selling part, or all of the business may help you to achieve these goals, but parting company with a venture that you have no doubt sweated blood and tears to establish is a big step and a decision which must not be taken lightly.
Before selling your business, you need to carefully assess your reasons for doing so. You only get one chance to sell a business and for this reason, it is vital that you weigh up the different selling options to decide what would work best for you. Carefully planning the process will ensure that you get the best possible result from the sale.
If you are considering selling your business its important to ask yourself four key questions:
· What are my objectives as the owner of the business? – You might want to realise some or all of your investment in the business to fund your retirement or future projects.
· What are my objectives as manager of the business? – Do you want to retire as soon as possible or prefer to keep running the business?
· What are my objectives for the business itself? – For example, the business might need new investment in order to grow.
· Who else will be affected and what will they want? – For example, other shareholders, managers and employees, or even key customers and suppliers.
When should I sell?
Whether you want to generate the most possible value from your venture, or find a buyer who is a ‘safe pair of hands’, you need to start planning years, rather than months in advance. Typically, including preparation, you should give yourself three to five years to sell a business, with only the last nine to 12 months being concerned with the actual marketing and negotiation process.
No matter who you decide to sell to, selling at the right time can have a significant impact on the price you get for your business. If possible, plan ahead so that you can pick the best moment rather than being rushed into a quick sale. For example, if you plan to retire in five year’s time, it’s a good idea to start planning the sale of your business now. This will give you an opportunity to build value in your company and put into place the systems and structures that will not only attract potential buyers, but also make the transition between owners as smooth as possible.
Are you emotionally prepared to sell?
Deciding when to sell will have as much to do with your mentality as your accounts and assets. All too often people rush into the process and do not give themselves enough time to prepare for the emotions that will arise during the sales process. You will need to make a lot of business decisions such as deciding who you want to sell the business to, when you want to sell it and what role you are going to have, if any, in the company after the sale.