As seen in the Cincinnati Business Courier.
You’ve decided to explore the sale of your business. Now what? The five recommendations listed below are more than worth your time, investment, and consideration.
1. Obtain a valuation
One of the most immediate tasks I insist business owners complete before a sale is actually understanding a real-world, fair-market value estimate for their business. There are several types of valuations, and if you are truly considering a sale, the kind performed by a seasoned deal professional who actually sells businesses for a living is generally preferable. Most other types are more useful for non-sale purposes. I wouldn’t trust a wealth advisor to give me accurate legal advice, so why would I rely on someone who doesn’t sell businesses to tell me what my business is worth? Ask whoever you are considering using how many businesses they have actually sold before you choose them to perform a valuation that you will use to decide whether selling your business is the right thing to do.
2. Meet business owners who have gone through the same experience
When you are considering a sale, there’s probably no better perspective to obtain than that of business owners who have actually experienced the process first-hand. I would encourage meeting with them and asking about the qualitative aspects of the deal and the lessons and takeaways they had. If you don’t know anyone who has sold a business, ask your accountant, attorney, or wealth advisor if they know any they’d be willing to introduce you to.
3. Truly learn the anatomy of a sell-side process and what it means to you
The sell-side process is a “grind.” If you do it thoroughly and properly, you are investing a minimum of six months before the final results (e.g., a closed deal). For most of that 6- to 9-month period, the seller, the seller’s service providers, the buyer, and everyone else concerned is sprinting. A good M&A advisor can walk you through the various phases of a sell-side process, from the prep phase to the “in market” phase to the execution phase. Each area is important to address before launching. The last thing you or your advisors want is for you not to realize the level of commitment needed to push a deal across the finish line.