When people leave their cushy careers in the 9-to-5 world to start a business, it isn’t because of money or accolades. Sure, you hope that someday your business will grow to the point that you become financially independent, and perhaps at that point the industry would stand up and take notice. Really it is passion that gets you to risk everything and take the leap into the entrepreneurial world. You are driven by a vision you can’t get out of your head, or a product or service that you want to make your whole life about. That’s why if the day comes when your business is so successful that someone actually wants to buy it from you, the decision to sell will be difficult. On one hand you could set yourself up for life, but on the other you’ll be giving up something significant. It’s not a decision to make lightly, so here are five things you should consider before selling your business.
First of all, what are you going to do with yourself? This consideration is all about where you are in your life. If you’ve worked your business for the past thirty years and have been considering retirement anyway, then this probably makes a ton of sense. But if this was your brainchild out of college and you’re still relatively young you aren’t going to want to go play golf for the rest of your life. Are you fairly confident you’ll land on another idea that inspires you just as much? If you consider this project your life’s work, you might not want to sell.
Will you have any input in what happens to the company after the sale? If the business is your passion project this is something you should definitely look into. Will you be retained in any sort of advisory role? Do you get to hold a position on the board, or stay on as a figurehead? Do you have any guarantees that the business will remain open? Some corporations choose to buy up their competition and close them down, just to get them out of the way. If you’re committed to maintaining your product in the market in a quality manner, you’ve got to get some guarantees on paper.
How attractive is your business for sale? There are definitely better and worse times to sell a company. If you’ve got a track record of success and continuously rising receipts coming down the pipe for the next several years, you’ll probably get a fantastic offer. But if the debts on the books outweigh the receivables, your company will be operating at a loss for the foreseeable future. You’ll probably get a lowball offer in this case, because the purchaser will be swallowing up all of that debt.
Are there legal issues that could complicate the sale? This is another tricky one, and nothing will wreck your sale faster. If there’s someone out there suing your company, or if there’s some sort of patent violation that will be going to court in the near future you may find yourself in serious trouble. You’ve got to let the buyer know about all of these issues, and not only will it impact the selling price, it may cause that person to walk away entirely. Just make sure that your business is legally in the clear before considering any offer on the table.
Finally, do you want some professional help to come in and negotiate the sale on your behalf? Just because you’ve built your business to this point doesn’t mean you’re the right person to seal a sale. That’s why bringing in a Tampa business broker can be so important. There’s a whole language around these sorts of transactions that you might not have any interest in learning. You’ll want someone who has been around the block to walk you through it and to make sure you aren’t being taken advantage of. Just think long and hard about the situation before you decide to handle the sale on your own. The percentage you give up will pay for itself with increased peace of mind.