While the truth may be painful, an entrepreneur who recognizes the realities they will face when selling a business will fare much better than one who does not.
Now that you have built a successful business, are you ready to sell it? You only get one shot to get it right. Best to measure twice and cut once.
Your business may have been years or decades in the making. Selling it, on the other hand, can be tricky. Forbes recent took up this topic in an article “The 5 Things Entrepreneurs Must Know When Selling A Business.”
So what are these truths?
- You Really Don’t Matter. Ouch! Buyers simply want to buy a business that is profitable in-and-of itself. When you, the owner, are not the greatest asset of the business, then the business is generally considered to be more attractive.
- Buyers Know Which Employees They Will Keep. That is right. Over the years, you may have hired family and friends as employees. While you value them, the buyer may not. In fact, the buyer likely has his or her own family and friends to employ.
- Even Good Debt May Catch Up to You. Debt is debt. The red and black ink on your business ledger can get in the way, especially if it is not structured properly.
- Handshakes and Signatures May Do You In. Your business wheeling and dealing may kill the deal. In other words, the buyer will have to contend with those agreements, promises, and sheer liabilities you have incurred building your business. This is commonly a problem when “agreements” were done on the fly, never reduced to writing or barely a handshake. A disadvantageous agreement penned in black and white can be as damaging as a solid agreement can be lucrative. It is the proverbial two-edged sword.
- Your Business May Be Your Accountant’s Biggest Annuity. Not only may family and friends get their paycheck under your signature, but so do various professional advisors. This can create (potential) conflicts of interest. Just be alert. If outside advisors find their “rice bowls” threatened, then they may drag their feet or at least be less than helpful.
The original article goes into much more detail, with even a bit more brow-beating.
Bottom line: the sale of your business is fraught with many challenges. Proper planning is key to navigating them successfully.