The Right Questions for Business Owners Thinking of Selling

By Amy Luoma

The Right Questions for Business Owners Thinking of Selling

By: Amy Luoma

When you are the owner of a business, it is always a good idea to be questioning what’s next, not just for the business, but for yourself as well. After thinking it over, you may realize that you want to sell your business. This decision is not an easy one, and you’re bound to have a lot of questions. These are some of the common ones most owners have before selling.

question mark on chalk board

Question #1: How much will you get from the sale?

This is the one question all sellers have, and it’s an important one as well. Unfortunately, there is not a straightforward answer. You will need to determine the most probable selling price of your business, found from doing a business valuation, using financials from the past three to five fiscal years. This is typically based on a multiple of adjusted earnings, or the seller’s discretionary earnings.

Finding the most probable selling price of a business is something that should be done by an experienced business broker who is familiar with the market and the various valuation methods that can be used. The number you go to market at effects what you get from the sale, and whether or not serious buyers are interested in making an offer for your business.

Question #2: Are you and your business ready?

To know if you are truly ready to sell your business, you should have a plan about what you want to do after the sale is complete. Spending time in leisure isn’t for everyone, especially business owners who are used to being busy. After their business is sold, it’s common for owners to get bored within a few months, then they start looking for something different to do. It’s a good idea to have something planned for after you sell, whether that be travelling, starting a new business, etc.

It may not be obvious whether or not your business is ready to be sold. There are a number of factors you need to look at. Things such as what would interest a buyer, and how your business is different from the competition are important to consider. Ensuring your business isn’t completely dependent on you is a good idea as well. Make sure it is able to operate successfully without you – you want to sell a business, not a job. Potential buyers are also going to be interested in what your profits and financial trends are like. Having organized and accurate financials is a good starting point.

Question #3: Can you stay after the sale for a transition period?

Frequently, sellers stay with the business for a transition period after the sale is finalized to help the new owner adjust. This is especially common if the seller played a big role in the business, or if the buyer is new to the industry. The terms for the transition period are typically agreed upon during negotiations. You need to decide if you’re able and willing to do this. If you’re unable to stay for whatever reason, make sure the business can operate without you there. In the end, you need to decide what’s best for the business, the new owner, the customers, the employees, and yourself.

Question #4: Who can help with the sale of your business?

When preparing to sell your business, you will need a team of professionals to guide and advise you throughout the process. Some of the professionals you should have on your team include an experienced business broker, a lawyer, and an accountant.

If you think you are ready to sell, contact our brokers for a free, privately held consultation.

To read information on this topic, check out this article on Forbes.

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