Time to Move On? Here Are 5 Things to Know Before Selling Your Business.

When considering selling your business, there are both financial and emotional aspects to your decision. After many late nights, sacrifices, tough decisions and years spent building a successful company, letting go of a significant part of yourself is not an easy step.

Understanding whether it’s time to sell, preparing for a sale and knowing what to expect during the sales process can help you decide whether to move forward, protect the value you’ve created and achieve the best possible outcome.

1. Consider the reasons behind selling

Take the time to consider what selling your business will mean for you, both professionally and personally. Are you selling because you want to, or are you under pressure (health, family or other personal issues)? 

Think about whether you’ve accomplished all that you set out to do when you first started the business. If you sell, will you want to establish terms that allow you to stay on for a set period to ensure a smooth transition? Are you ready for the next phase of your life? If so, what does that look like after the sale of the business? You may have another venture in mind, or perhaps it’s time to take some time off to spend with family and friends. 

You want to feel confident and comfortable in your decision and what the future holds for you.

2. Evaluate market conditions

Are market conditions ripe for a sale? Assess both the broader economic environment and your industry’s outlook to determine whether it’s the right time to go to market. Buyer demand, interest rates, access to financing and activity within your sector can all influence valuation and deal terms.

If your business is performing well and the market is favorable, you may command a higher price and attract more qualified buyers. Whenever possible, plan your exit strategically rather than waiting until circumstances force a sale.

3. Position your business for a sale

You want buyers to want to purchase your business. For this to happen, you need to ensure you have the right talent in key positions, that your business processes are optimized, that your financials are in order and that your messaging in the industry is purposeful and clear. 

For example, regarding your financials, ensure that your books are reconciled, complete and well organized. A good business has clean data, and prospective buyers care about how organized a business is. The more detailed the financials are, the better insight a buyer will have into your business. Having financial forecasts can also be helpful as buyers consider different ways to structure a deal. 

Feature your leadership team’s experience and knowledge to demonstrate business continuity after your exit from the company.

4. Pick the right advisors

As soon as you begin to consider selling your company, make sure you have the right bench of professionals at your disposal. Firms like mine, 48North, talk to thousands of companies annually and can help you think through a valuation. 

It’s also critical that you retain a good attorney to represent you through a sale process. We highly recommend using an attorney who is well-versed in M&A transactions, as a traditional generalist attorney can become a big bottleneck in the process. Structuring transactions can be complicated, so it’s important that you have an experienced lawyer in your corner through a transaction.

As an owner, you need to remember that you still have a business to run, so it’s also important that your finance team, whether that’s your internal CFO or your third-party accountant, is in the loop and ready to help. Financial due diligence checklists can be lengthy and take a lot of time to fulfill, so you want to make sure the team helping with that has access to the right documents and has a deep understanding of your numbers. 

The worst thing you can do when going through a transaction is take your eye off the ball and have revenue pullback. So, make sure you have a team that’s able to support you so that you can balance running the business and pursuing a transaction.

5. Consider who the right buyer is

Depending on your business, you may have several types of potential buyers, including strategic buyers already operating in your industry, financial buyers seeking investment opportunities and entrepreneurs looking to acquire and grow an established company. 

Money is always a factor when considering whether and when to sell your business. Equally important are other considerations: Is the buyer culturally aligned with you? Will they be a good steward to your business? Will they take care of your employees? Will they keep the name of the business?

It’s challenging to let go of something you worked so hard to build, but when the time is right, make sure you’re prepared to control your outcome and leave your business in the right hands.

When considering selling your business, there are both financial and emotional aspects to your decision. After many late nights, sacrifices, tough decisions and years spent building a successful company, letting go of a significant part of yourself is not an easy step.

Understanding whether it’s time to sell, preparing for a sale and knowing what to expect during the sales process can help you decide whether to move forward, protect the value you’ve created and achieve the best possible outcome.

1. Consider the reasons behind selling

Take the time to consider what selling your business will mean for you, both professionally and personally. Are you selling because you want to, or are you under pressure (health, family or other personal issues)?