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Best time to sell?

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by Daily Commercial News last update:Mar 21, 2007

Most of us will experience, at least once in our lifetime, the highs and lows that come with selling a home.

FCBI

Most of us will experience, at least once in our lifetime, the highs and lows that come with selling a home.

From making the initial decision to sell your home, to making improvements such as painting and minor repairs, to having strangers trooping all throughout the house, to the point of the final closing, there is a lot involved in the process of preparing your home for sale.

Participating in the sale of our own business is not something that most owners do more than once. Businesses are most often something you retire from, unless you are the owner.

Although it is not unusual for individuals to make numerous career changes, we still find that business sales are usually once-in-a-lifetime events for most of our clients. And that means that many business owners are very unprepared for what is involved in the sale process.

After all, sticking a For Sale sign on the front lawn of your construction office or building sites might get the business sold, but at what price? Selling a business is a long and complex process, requiring as many as 1,500 to 2,000 hours. There are many pitfalls — and that is why there is a growing trend to using professionals such as business intermediaries to broker the deal.

We have been helping people sell their businesses since 1974, and based on our experiences, here is a Top 10 list of tips to help make the experience a positive one.

1. Be reasonable about the value of your business. Inflated expectations interfere with your business intermediary’s ability to negotiate the best value for you.

2. Carry on business as usual — don’t become so obsessed with the transaction. Your eventual buyer will need to see a healthy business, not one suffering from neglect.

3. Keep the sale process strictly confidential. A breach of confidentiality surrounding the sale of a business can alter the transaction dramatically. Any potential purchaser looking at a business for prospective purchase must sign a confidentiality document.

4. Prepare for the sale well in advance. Be sure your records are detailed and complete for at least the past few years and do all pertinent legal or accounting housecleaning as well as a physical sprucing up of the office or plant.

5. Anticipate information the buyer may request. In order to obtain financing, the buyer will need appraisals on all assets, plus information to satisfy any environmental regulations that may apply.

6. Achieve the highest price through buyer competition. Since this can be tricky, you are advised to let your intermediary, as a third party, create a competitive situation with buyers to position you for the best transaction value.

7. Be flexible. Don’t be the kind of seller who wants all cash at the closing, or who won’t accept any contingent payments or an asset transaction.

8. Negotiate, don’t dominate. You may be used to being your own boss, but the buyer may be used to having his way too. With your intermediary’s help, decide in advance when to hold and when to fold.

9. Keep time from dragging down the deal. To keep the momentum up, work with your intermediary, your accountant, your lawyer and other experts to ensure potential buyers stay on a time schedule and offers move in a timely fashion.

10. Be willing to stay involved. Even if the process has been exhausting, realize that the buyer may want you to stay within arm’s reach for a while.

Consult with your intermediary to determine how best you can achieve a smooth transition from owner to past owner. And above all, remember that planning ahead is key. I find that too many business owners fail to plan for the day when they will want to sell. Then something happens — most often a health problem — and they are forced to sell quickly.

Rushing to sell can result in a failure to recoup the true value of the business.

The best time to sell is when you don’t have to.

Doug Robbins is president of Robbinex Inc., specialists in the sale of privately owned business. He may be reached at 1-888-ROBBINEX or www.robbinex.com

last update:Mar 21, 2007

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