With the business press and many brokers touting the current favorable envirornment for business sales, a lot of owners may be contemplating selling their companies. Before making that move, we urge would-be sellers to consider these three critical questions:

1. Mr./Ms. Business owner, are you really ready to sell your company? That sounds simple enough, doesn’t it? But thinking that you know the worth of your company and then having a valuation specialist put a number on that value is not enough. The real question is: Are you personally, emotionally, and financially prepared to change your life? (Yes, selling a business involves a significant life transition.) Be honest with yourself. Make certain that you have planned ahead for your next chapter, including what your lifestyle will be like after the sale. You’ve been an active participant in the business community, interacting with employees, clients/customers, vendors, business colleagues, etc. All of that will change. What have you planned to fill that void?

2. Why would someone want to buy your company? Most business valuations are based on productivity, results, and company preparedness for sale over the last three-to-five years. A savvy buyer will want to know what the ROI (Return on Investment) might be, both financially and emotionally for him/herself. What is it about your company that would say to a knowledgeable, savvy buyer that your company will provide the ROI that he/she seeks? Is it past history (which is not a guarantee of future results)? Is it a pipeline filled with prospective new business activity (which is not a guarantee of sale closure)? Or is it how well you have implemented the six drivers of company value that produce future growth and profit?

3. Is this a good time to sell the company? Actually, regardless of market prognosticators, only YOU can determine the answer to that question. There are many different types of potential buyers. While lending rates may be up, there is still a lot of money available for business transactions. Current market conditions may be conducive to a peak sale, but the questions remain: Have you had enough? Are you really prepared for the next step? Is your company really prepared for a peak sale?

If you’re uncertain about your preparedness to sell, or whether your company is ready for a peak sale, please contact us at Wayne@richbizbrokers or RBennett@richbizbrokers.com. We’ll help you clarify your dilemma and help you understand what you may need to do to be prepared.

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