You can also go through a business advisor or broker who can identify potential buyers for you, including companies that may not have occurred to you. If you pinpoint who you’re looking to sell to and it’s a familiar competitor, vendor, or current customer, you can simply approach them and pitch the sale. With your assessment and price in hand, and a solid plan to rectify any pre-sale problems, you can start to think about the actual sale - a process that can happen in a number of ways. They can be expensive to work with, but they can be incredibly useful to understand the market value of your business,” advises Wiggins. “There are plenty of companies that exist to value other companies. You can also hire a business valuator who can help you evaluate a fair price for your company. Wiggins continues, “There are websites where you can find out the approximate value for mainstreet businesses worth $5 million or less, and you can look at what other people are trying to sell their business for.”įor technology businesses and companies worth over $10 million, there are databases you can subscribe to, like Pitchbook, that will show you analogs to a given business. But what matters the most is what potential buyers think it’s worth.” “This is your baby of course you’re going to see it as highly valuable. “Deciding how much you want to walk away with and figuring out if your business currently is worth that much will help you set realistic expectations,” Wiggins says. “But if those issues have been addressed by the seller proactively, they won’t be able to reduce the price, and the seller can walk away with more money in their pocket.”Īnother way to avoid surprise (and potential disappointment) when selling a company is making sure you have an accurate idea of how much your business is worth. They expect to be able to find problems or holes during their due diligence that they can use to lower the price,” she reveals. The key, though, is that buyers don’t actually want to pay that price. “Currently, it’s a seller’s market, so the buyer will likely have to offer a large price to get the seller’s attention before starting negotiations. She says that it’s advisable to have a third-party assessment completed so you can address any gaps or problems before you put your company up for sale, and that having an assessment can increase the value of your business by up to 70%. Even if it doesn’t play out exactly as planned, this exercise will be illuminating.Īccording to Wiggins, you should start the planning process 18 to 24 months before you put your business up for sale. Your business entity: Are you attached to your business continuing as a standalone entity, or would it be ok for it to be merged into a larger company?īe clear in your answers.Your customers: If your buyer discontinues your products or lays off your employees, how will that impact your customers?.What kind of retention policies will you want to have in place? What do the employees want? Some might leave with you others will be scared about losing their jobs. Or they might plan layoffs to reduce duplication of effort, especially of back-office staff. Your employees: The buyer might want to keep the existing team because they know the business and customers.Your buyer: Would you prefer to sell to employees, a family member, a competitor, a customer, or a partner? What are the implications of selling to that type of buyer?.Your goals: What are your plans after the sale? Do you intend to continue working in the business for a period of time, or are you planning to leave right away? How much do you want to walk away with? What will it take to get your valuation to that point?.To determine those goals, Wiggins encourages her clients to first ask some questions: “The amount of preparation they do is the single biggest factor in determining whether the sale is successful and the seller’s goals are achieved.” “Business owners tend to focus on the transaction without considering the preparation required to sell successfully,” says Wiggins. The biggest takeaway from our conversation: Sellers who prepare ahead of time are the happiest with the results. To discuss this topic in detail, I recently spoke with Laurie Wiggins, CEO at Byond, a consulting firm in McLean, Virginia, that helps small and lower mid-market companies successfully navigate the merger and acquisition process. What should you think about now, so you can be prepared when the time comes? But at some point you will be ready for a new adventure. Right now, you are having far too much fun running your business to think about selling.
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