You’ve spent your life building things – your family, your business, your life. So, let’s start by saying “Congratulations!” Not everyone is an entrepreneur who manages to accomplish what you have – in fact, most people don’t, so count yourself as a high achiever!
But you’re looking toward a new phase of your life, one with less pressure, fewer obligations and more free time. Let’s assume, for purposes of this post, that your children have other priorities, and you have no partners interested in buying you out.
So, how do you monetize your business so that it can provide you with a return on your years of effort without your having to own and run it for the rest of your life?
There are a number of options open to you – but, we’re assuming your heirs and/or partners aren’t eager to take on both the business and your mantle as the person in charge. You might want to sell your closely-held business outright, in such a case.
Selling a closely-held business is a multi-phase process, with numerous steps making up each phase. Phase I is getting your business ready for sale – and getting yourself ready to sell the business. Often, when push comes to shove, owners of closely-held businesses find themselves reluctant to let go of the reins. That’s an emotional reaction, perfectly normal and human when contemplating relinquishing control of something you’ve spent decades building, nurturing, and running.
But it may be necessary to set those feelings aside, to get out of your own way, in order to move forward with your life and your long-term goals.
Your first steps should be to ensure your business runs like a well-oiled machine – a self-managing concern that can thrive without your day-to-day oversight. Make sure you have documentation in place, or hire someone to put this in place for you, covering the details of:
Have your employees review this documentation. Solicit their input and make any necessary corrections, so that if an employee leaves, or their duties need temporary coverage, you have specific documentation detailing each major function of your business. Make sure employees are cross-trained to cover one another’s job functions, because emergencies do happen.
Make sure your team is well-versed in every policy, procedure, process, and duties as applicable to each of their functions as team members. This will make your business much more attractive to prospective buyers, as new ownership would be able to hit the ground running.
Next, you will need to put a team together to advise and support you through the selling process – you will likely want:
In readying your business for sale, some recommended steps may seem counter-intuitive – for example, moves you’ve made to minimize your tax liabilities may make initially your business look less profitable to an outsider than it should. In order to present your business and its financial picture in the most favorable light to potential buyers, you may, acting in concert with your Transaction Advisory Team, want to consider:
Note that these are only a few examples of strategies you and your Transaction Advisory Team may look at in readying your business for sale – God (and the Devil) are always, always in the details.
Timing the sale is also important in ensuring your get the best price for your business:
Your Transaction Advisory Team can tailor a plan to maximize the on-paper value of your business based on your individual situation, and evaluate the timing of the sale. What will work for one business may not work nearly as well for another – I know I’ve said it before, but one size does not fit all.
Selling a closely-held business can take six months to a year, so if you are seriously considering the sale of your business in 2022, now is the time to contact us and get started.
If you would like to get the process underway, please click here to email me directly.
Until next time –