There’s more to a business transaction than just tallying up numbers–it’s a complex, three-dimensional idea that requires thoughtful reflection as a business owner. You’ve spent time and energy tenaciously building your business and it’s about to pay off. So, it’s worth thinking about the following factors as you ask yourself “should I sell my business?”
Timing is everything.
Consider for a moment what’s going on in the broader macroeconomic environment and what’s expected in the coming years. There may be more willing buyers in a growing economy–in a recession, not so much. When there are more potential buyers, you may have multiple offers to consider.
Additionally, your business will likely fetch a higher valuation when you can demonstrate growth, a challenge in a recessionary environment. And yes, it can be hard to predict whether the perfect time is around the corner or right in front of your nose. But look at what is important to you today and the transparent guidance provided by your team of trusted advisors to help you make the right call.
What’s going on for you personally?
While the state of the economy is critical to contemplate, let’s also not forget about the personal element at stake here that’s equally as important. Do you think you’re at a point where:
- You have time and energy to devote to planning for a sale? This requires planning not only for the business, but your personal financial future as well. Pre-sale planning is critical to a smooth transition…if you don’t feel you can run your business AND focus on selling it, that’s a serious factor to consider as you think about a sale.
- You would be satisfied letting go? Selling a business can be very emotional. After so many years of tireless efforts, are you ready for things to slow down? To not have an office, a team, benefits, or a schedule? If so, the timing may be right to consider a sale.
What do you want your business legacy to be?
There’s a multitude of exit strategies depending on WHO is a potential buyer for your business. Having a sense of what you want your business to be post-sale is an important starting point for thinking about what’s possible.
- Do you want the business post-sale to resemble the business you’ve built? This may mean transitioning ownership to a stand-out employee or finding a buyer who wants to acquire a successful business to enhance. These sales may take longer to plan for and implement and may include your involvement in the business after the sale.
- Do you want to capitalize on what you’ve built and sell to the highest bidder? With less concern about how the business operates after your exit, this may allow you to maximize your payout. A strategic (industry) buyer may be an option if you aren’t concerned about restructuring under a merger/acquisition.
It’s important to know where you stand on how you want the business to operate after you sell–otherwise, you may have regrets about the sale, or accept offers that come with strings or attachments that you didn’t intend when you started the sale process.
Is the business in good shape for a sale?
Answering these questions will spotlight the items you need to think about and adjust to get ready for a future sale.
- Are the business financials and metrics such as revenue growth and EBITDA in order? An M&A advisor can help you evaluate these and other critical measures that buyers will care about.
- Is your personal financial house in order? Do you know what you need from a business sale to live the life you want to live post-sale and will a business sale provide for that?
What will you do next if you sell?
This transition will require you to be strategic about your successor and recognize the very real possibility of the new owner asking you to remain on for some time. Also, after years of building and running a business, you will need to consider what you will wake up and do every day post-sale.
Business owners asking themselves if they should sell and what to expect during the process will find value in real planning and solid advice. That’s why meeting with a wealth advisory firm like Monument will be critical to do in tandem with your business planning.
Our clients hire us because they recognize the value of our team’s unique, straightforward, unfiltered opinions and tailored advice designed to answer THEIR questions–not everyone else’s. Questions about your business are too important to be left to anyone who is focusing on someone else’s. If you have questions, we have personalized answers.
This first appeared on Monument Wealth Mangement.