Here’s What You Need to Know.
It’s always intriguing when you get a call about your interest in selling your business. You may not have even considered selling before that moment, but suddenly, the idea is appealing. This could be the start of something big. Here’s what you need to know.
Selling your business, for most owners, is a once-in-a-lifetime event. It’s probably also the biggest financial decision and transaction of their lives. So you should take the advice you give all your customers about fixing their own A/C unit: don’t try to do it yourself. Hire a professional to get the job done right.
If you’re serious about considering a sale, your first step should be to connect with an experienced business broker. They can give you essential information about the current market and the value of your business. They can also give you advice on how to increase the marketability of your business.
Most importantly, they’ll help you connect with other qualified buyers. If your company is attractive to one private equity firm, chances are there are several other buyers who would be interested as well. Brokers have large networks of potential buyers who might be a fit for your company.
In many ways, selling your business is like selling your home (only much, much more complex.) In real estate transactions, each party has a representative whose job it is to protect their interests. Private equity agents are professional buyers; they make deals for a living. (You install HVAC systems.) They’re out to get the best deal for their investors, and that means getting the lowest price and most favorable terms for them. On your own, you’re probably at a tremendous disadvantage in the negotiations.
You’ll need someone on your side who can help you understand the terms being offered and the long-term implications of a contract. A broker can help you navigate the complexities of the sale agreement and make sure the deal is structured fairly for both parties.
A broker can help you indentify pitfalls from contractual issues such as holdbacks (a portion of the purchase price not paid at closing), earn outs (part of the sale price that’s contingent on future performance), consulting agreements, leases and real estate sales, warranties, and non-compete agreements. (We told you it gets complicated.)
A broker is also an objective advisor; they can help you negotiate and make decisions based on the numbers alone. It’s hard for most owners to put aside their emotions during the sale process. You take your business personally, naturally, and selling can bring up a lot of feelings, from elation to grief at the loss of your identity as an owner and executive. The process itself requires patience and a cool head, and an experienced broker can manage the frustrating parts of the deal while you stay focused on running the business.
Lastly, there are several great brokers who can help you with your transaction. Even if its not me, I would encourage you to seek the assistance of a competent pro to be by your side.
“Take the Advice of some Prudent Friend; for he who will be his own Counsellour, shall be sure to have a Fool for his Client.” William De Britaine, 1682.
Curious on what your business is worth? Find out now