Business owners can receive offers to purchase their company at any time, even if the possibility of selling was not being considered. What important things should you keep in mind when deciding whether to accept or decline the offer?
- Be sure it’s time to sell. Are you ready? Have you accomplished what you set out to do? What will you do afterward? Are you the right age to retire? Are you ready to try something new? Is the offer too good not to consider? These ideas should be part of your thought process.
- “Cash is king,” but should you consider financing? Not all buyers have the cash or financing available and may ask you to help with some of the purchase financing. Typically, the sale price of a financed transaction is higher than an all-cash deal. Consider if asking the buyer to pay all cash is the best way for you to sell, or if you will get more by taking a note for a few years.
- Hire an attorney experienced in business sales who knows and understands the basics of your business. Don’t use just any attorney. Having more experience in other business sales can be helpful with yours. You may also need counsel after the closing if any issues or disagreements arise with the buyers.
- Be sure all the terms are clearly spelled out. The more details that are thought of and spelled out when drafting the contract, the fewer there are to turn into problems later.
- Be prepared to work for two or three more years to aid with the transition period, but be ready to vacate once it ends. You should expect to be very important to the buyers on day one of new ownership as they will usually need assistance with introductions to the customers and the day-to-day operations. Conversely, when the transition nears the end, you may no longer be seen as essential and should sense when to exit graciously. It will be uncomfortable witnessing the new owner doing something you disagree with, but it’s their business now. Embrace the right time to move on to your next challenge.
