The Business Owners Pre-Sell Plan FIVE AREAS OF PREPARATION BEFORE SELLING YOUR BUSINESS
TOM KERCHNER, MANAGING DIRECTOR BMI MERGERS & ACQUISITIONS Selling your business is a big decision that most people do only once in their lifetime. For this reason, it pays to do it right, and like most important decisions, it requires planning to achieve your goals. There are five key areas to consider before selling: Personal Goals, Financial Planning, Business Goals, Tax Planning, and Business Preparation. Ideally, the planning process starts several years before you sell. If you find yourself thinking sooner than later, even a few months of preparation can go a long way to achieving success.
PERSONAL GOALS This is a good time to reflect on what you want to be doing one, two, or five years after selling. Selling your business rarely means instant retirement. In fact, there are a number of options you can choose, including full or part-time employment, consulting, reduced responsibility, or transitioning into full-time retirement. Retaining some ownership is another possibility. If you have children working in the business, you will want to think about how a sale will affect them and how you approach the subject of selling. Depending on your desires, these issues can impact how you prepare your business and the type of buyers you pursue.
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FINANCIAL PLANNING Work with a financial advisor and have a plan that addresses your post-sale financial needs. How will you adjust to the loss of regular business income, and will you be able to maintain your lifestyle? Are the sale proceeds needed for a comfortable retirement? If so, then you have to think about how much is needed versus the current estimated value of your business. An M&A advisor or business valuation professional can help determine the likely value of your business. Other financial considerations include determining how the funds will be invested, tax-saving strategies, charitable giving, and setting up trusts or other means of transferring wealth to family members.
BUSINESS GOALS What happens to your business and employees is a major concern for most business owners. Is keeping the business independent and your current management team running the company important to you? If so, this may preclude certain buyers. On the other hand, combining your business with a larger organization could present new growth opportunities and advancement for employees. These goals are sometimes but not always mutually exclusive. Another key aspect is culture fit. If part of your legacy and business success is tied to your organization's culture, you will want to find a buyer who shares your beliefs and values. Quality businesses will attract multiple buyers. Those buyers will have different plans and MyNetworkMag.com
