In “Selling with Certainty: straightforward advice for cashing in on the full value of your business”, Terry Monroe shares his decades of experience buying and selling businesses himself, as well as advising hundreds of buyers and sellers.
How to prepare yourself AND your business for a sale… what pitfalls to avoid… and how to maximize your payout?
What’s the big idea?
The big idea is that selling your business is a VERY emotional journey. To retain your sanity, you need a buffer between you and the buyer – an expert. So you won’t get caught in the “business is my baby” syndrome, talk too much when you shouldn’t, or get defensive during negotiations.
Case in point, even as experienced as the author is, he too has fumbled when he was selling his own businesses.
You also need an expert because this is probably your first time going through the process, whereas they’ve seen everything many times before. So don’t treat selling your business like selling your car. You have to prepare yourself AND your business.
How to get the most for your business
In order to get the most for your business, you have to sell at the right time. Ideally when you have 2 to 3 years of solid growth. Because that’s what the buyers are going to extrapolate. They think they can do even better than you.
Of course, very few people sell during good times. But if you wait and there’s a hiccup, even one year of down sales, then you lose much of the value because the future becomes very uncertain.
Some tips and pitfalls to avoid
One tip is to always offer to prepare the purchase agreement. Because when you and your lawyer control the paperwork, there are some details that you can make in your favor.
Another tip here is to go with a lawyer who is a specialist in mergers and acquisitions. Sure you probably have an in-house lawyer you’ve relied on for years and knows the business inside-out. But they have no experience selling a business.
Don’t take their business or valuation advice – ever. And don’t let them learn the process on your dime. Besides, if you DO sell the business they’ll be out of a job, so your dream goes against their incentives – you’re NOT aligned, even if only subconsciously.
So selling your business is a process, you need experts to help you get through it, and you need to start preparing for about a year before you actually sell. And it’s an emotional roller-coaster… try to be prepared, and enjoy the ride as much as you can!