References

What’s so hard about selling a business?

  • Commitment – You put your heart and soul into your business for so many years. Are you sure you will really let your “baby” go?
  • Objectives – Will the sale really meet your objectives – retirement, change in life, debt reduction or focus on core business, etc.?
  • Condition & Timing – Is this the best time to sell? Have you prepared your business to be in top condition and attractive?
  • Confidentiality – How do you find buyers without losing confidentiality? How do you sort out tire-kickers and sniffing competitors? What information should you give out? How and when?
  • Buyers & Price – Who would pay the most? Where would you find them? Is the value in the eyes of the beholder? How would you know if you haven’t left any money on the table? What drives the value or price?
  • Transaction Type – Should you sell assets or shares? What are the tax consequences? What are the legal implications?
  • Transaction Terms – Buyers will always ask for terms. Should you take notes, shares, earn-outs, consulting fees or non-compete fees? What if they let your business go down before you collect your notes?
  • Earn-out – What basis is the best for calculating earn-out: future profit, revenue, customer retention or production targets?
  • Deficiencies – Buyers love to pick on deficiencies to haggle on price. On which deficiencies should you spend the money to fix?
  • Employees – What if the buyer asks you to fire employees before the sale? When should you tell employees? What if they leave?
  • Future Liabilities – Purchaser will ask for representations and warranties. Do you know which ones to give or not give? What are the risks?
  • Capital Expenditure – Which expenditures should you defer without damaging the sustainability of the business? Which ones will enhance the sale price?
  • Time & Patience – Buyers will ask you same questions over and over and each buyer will take 20-40 hours of your time even before the offer. How many can you handle without losing focus on your business?