This is not the time to settle
Selling your business will be one of the most consequential decisions of your life. The sale is almost always irreversible, and will profoundly affect your financial well-being and peace of mind for years to come.
A key part of the business-sale process is finding the right buyer for your company. Here are some pointers to help you get started.
Determine your most realistic options.
While you might have imagined your family would be interested in leading the business you built, that isn’t always the case. Perhaps a group of executives within the company would like to buy shares in your business and ultimately take it over. Another option is to set up an Employee Stock Ownership Plan (ESOP) that eventually transfers ownership to the employees.
For many owners, the most realistic option is to sell to an outside third party, either the owner of a synergistic business, a private equity group, or a family office. The difference between a private equity group and a family office is that a private equity group invests other people’s money and a family office invests their own money. A family office typically buys a company that will help them generate income for decades, whereas many private-equity groups seek to grow and re-sell a business at a profit in five to ten years.
Clarify your priorities.
Make a list of what buyer attributes are most important to you.Take into account traits that would impact the future well-being of your employees, partners, and the community. For example, consider qualities such as trustworthiness, industry expertise, and a good reputation. Should the buyer have a track record of acquiring companies that successfully retained existing employees?
In his book, “Selling without Selling Out,” Sunny Vanderbeck of Satori Capital suggests building a picture of your company the day after the sale. Who is the CEO? What message is on the website to your customers? What changes will be made to your role and the leadership team? What changes will affect your employees?
Plan reverse diligence.
How will you vet potential buyers to determine if they are the right buyer for your company? What questions will you ask to determine their values and plans for your company after the sale? Do their past actions match the types of promises made during negotiations to buy your business?
Build your network.
Get involved with industry associations in which you can connect with fellow entrepreneurs and business founders. Some owners may be looking to grow through acquisition. Others may have gone through the process themselves and can recommend trusted advisors.
Hire industry experts you trust to give you current, honest advice.
Investigate and retain experienced advisors with the integrity to be discreet, objective, and forthright. You don’t always have to follow their advice, but it always helps to learn how an industry-wise outsider views the competitive strengths, weaknesses, and future potential of your business.
For more than 40 years, I have helped owners prepare their businesses for sale and develop their exit strategies. There is no one-size-fits-all strategy or best practice, because every owner has different circumstances and expectations.
Call me at 561-543-2323 to talk more about how to start the process of finding the right buyer for your company.