Exiting your small business can happen in a variety of ways.  You can pass your business onto your kids, sell it on the open market, transfer it to employees, or just close up shop.  Your circumstances and goals dictate which option is best for you.  The key to each of these options is working with an experienced team.  This includes a good business broker or investment banker, a good attorney (hint: I know a guy), and possibly a business coach and some consultants.  Some general guidelines to consider when thinking about exiting your business:

  • Start early.  The earlier you begin planning for your exit, the more successful it will be.  Ideally, I prefer to begin working with clients three years before they want to complete their exit.  This provides ample time to clean the cobwebs out of the business, determine where you stand today, and put some plans together to get the business to be worth what you need it to be worth to exit into a lifestyle you deserve and desire.
  • Cast a wide net.  Many clients are surprised to learn that the most effective way to sell your business is not to simply find “a buyer”.  A good broker or investment banker will seek out a dozen possible buyers or more.  Not just tire-kickers.  But a dozen or more actual LOIs (letters of intent) from serious buyers ready to pull the trigger on buying your business.  Why so many? Because gathering that many serious purchasers is the only way to know what your business is really worth.  And once we have that group identified, we can start pitting them against one another to get you the best price and terms.
  • Think beyond just price.  Getting the right price for your business is important.  But other factors may be just as important.  Do you want a lucrative employment agreement with the buyer after the sale?  Is one buyer paying the entire price in cash, while another is asking you to carry a note for five years?  Which buyer is most likely to actually obtain the financing needed to close the deal?  Is one seeking an earn out (essentially putting the risk of success back on you, the seller)?  Which buyer is most likely going to successfully carry on the legacy you’ve built?  There are a lot of questions to consider beyond price.  We call these the “structure” of the deal.  Factoring in all of these other aspects of the sale is another reason to attract multiple bidders.  Each one will have their own unique twist on how the transaction should be structured.
  • Be open to change.  Your broker or investment banker may open your eyes to some changes that need to be made in order to maximize the value of your business.  Be open minded. If your answer to most questions is, “That’s the way we’ve always done it.” then you may have some significant opportunities to clean up your business (both physically and operationally) and increase the number of buyers who would be interested in taking a look.  You should also consider interviewing business coaches or consultants who can help you make changes that improve sale value.  Yes, these coaches and consultants cost money.  But in most cases, the fees paid to these professionals are tiny in comparison to the increase in purchase price they can help you achieve.
  • Tax.  Selling your business could be the largest taxable transaction of your life.  Or not.  Managing the tax impact of selling your business requires absolute expertise in the field.  I work alongside dedicated tax attorneys and CPAs who stay on top of the ever-moving field of taxation to be sure your deal is structured in a way that minimizes the tax impact.

These are just a handful of the issues to consider when it comes time to sell.  I have over a decade of experience as an attorney structuring and documenting these deals.  I love this work.  It is literally the moment in time that all your hard work comes to fruition.  Being alongside you for that ride is a great honor for me.  I will walk you through the process, explaining each step in plain English.

I also love diving in to work through the often emotional and stressful aspects of the sales process.  As much as you may lean back in your chair and daydream for a few minutes about sailing off into the sunset, selling your business can take a toll on you emotionally.  And we can expect the buyer to be just as emotional and nervous.  Being honest, most attorneys simply don’t understand or even notice this very human element of the sales process.  Yes, I am highly qualified to handle the documentation of your deal.  But I’m also very attuned to the human beings going through the process and the impact a transaction like this can have.  It’s one of the reasons I love this line of work so much.

Feel free to e-mail or call me any time with questions.