Deciding to sell your business is hard, no matter how ready you are to retire and move to Florida. Owners need to realize that’s just the first of many hard things you’ll do before you close the deal.
Humans, especially entrepreneurs, want to stay focused on how they’ll feel after the hard work is done. After this hard workout, I can take a nap. After I sell the business, my spouse and I can take all those vacations we’ve been talking about for years.
Selling a business is more like a marathon than a morning jog; the goal of finishing helps you get through the grueling training and the pain of running all 26 miles. Here’s what I tell owners to prepare for:
Getting ready to list your business takes a lot of upfront work.
You’ll spend time discussing the plan and the timeline with your family and financial advisors. You’ll agonize over whether this is the right time to sell. You’ll have to ask yourself the tough questions about what comes next; if you’re no longer a business owner, who are you?
Getting your records and financial documents in order can be tedious and time-consuming. If you’ve mostly been managing the business by the seat of your pants, you’ll need to modernize and be ready to pull reports and provide information quickly and confidently. I always recommend that owners start cleaning up their books a couple of years before the sale. That might mean getting rid of personal expenses and add-backs so your tax returns reflect your true profitability. That means paying more taxes, which can be painful in the short term. You might also need outside help to get organized, but the expense will pay for itself during diligence.
You’ll deal with dozens of important details and buyers who question your past actions and decisions.
Some business advisors use the term “opening the kimono” to describe letting a buyer into your company’s inner workings, missteps, and tough decisions over the years. Full transparency during a negotiation or due diligence process feels like being naked in front of strangers, and it is uncomfortable.
It’s easy to feel defensive, even angry, when someone seems to be challenging your business judgment. But you’ll have to learn to deal with that if you want someone to pay you millions of dollars for your company.
Having an experienced broker on your side can help remove some of the discomfort and emotion from the process. Whenever possible, your broker will handle routine communication so you can focus on running your business and staying profitable. Your broker will also help you avoid costly mistakes and miss deadlines during the diligence process, which should help you sleep better at night.
Seller’s remorse is a phase almost every owner goes through.
You’ve probably been in the industry since you were old enough to turn a wrench. It’s part of your identity and your legacy in the community. Your employees are family – sometimes, your customers feel that way, too. The confidentiality (i.e., secrecy) surrounding the sale can feel dishonest, and that can take an emotional toll on an owner. Keep in mind you’ll be dealing with the diligence process over several months, so the marathon metaphor still fits.
Most owners will only sell a business once in their lives, and they’ll have just one chance to get it right. Did I choose the right buyer? Will they take care of my people? Will they take care of my customers the way I would? It’s natural to wonder if you’re doing the right thing, and doing it the right way. You’ll need support from your family and trusted advisors to see things clearly.
Is it worth it? Absolutely.
I’ve helped hundreds of business owners sell their companies and move on to the next phase of their lives. Most of them didn’t realize how tired they were until they could take time for themselves again. Life after business ownership is real, and the more prepared you are for the work it takes to get there, the more you’ll appreciate the reward at the finish line.
