This is another popular question that most business owners ask, but many of the answers tend to generate a significant amount of emotion for all of the parties involved. But you should know…WHO will be buying the business may have as much to do with the VALUE and the amount and type of work you’ll need to do before the sale is complete.
If you want to sell your business to a family member(s), or to a key employee, the price may be much different than if you decided to sell it to multiple employees, to your competition or if you were to sell it on the open market.
If you will be selling to family members or key employee, there will likely be more emotions surrounding the business. Many business owners want to leave a legacy – something that can be viewed by others and their hard work acknowledged. The deal may require the owner to provide the guidance, insights and systems needed to successfully transfer a business to the willing buyer. This could take a minimum of 3-5 years and, in some cases, even longer. It may also create the situation to minimize the value to limit taxes or valuations.
On the other hand, if you’re plan is to close the sale and walk away (much like selling your home) – the deal structure, pricing, financing and options will be MUCH different. There will be much more time in preparing and documenting the business. The ‘due diligence’ process will be a significant portion of the sales process to a more ‘non-emotional buyer’. You should know that, as the seller, you will need to provide detailed documentation that will support the claims you’ve made that will support the value proposition you’ve made to the buyer.
- Identify WHO You’d Like to Buy Your Business. This isn’t the time for you to WISH. This is time for some honest communication. Just because someone once said “it might be nice to own a business” doesn’t mean they are ready, willing and able to make it happen. If you don’t have anyone who is interested – don’t worry. That’s what business brokers and your Transition team are for. But knowing WHO you want to buy the business will help us determine the path of least resistance and where will will need to spend our time in the early stages of the Exit Planning process.
I wish you all the insight and wisdom need to set your plans in place. Until next week.
Health, Happiness and Abundance
Advanced Business Coaching, Inc.