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Just Before You Sell-Off Your Business...Consider These Options

Companies are sold for many reasons: founders break up or burn out, investors force a sale, money runs out or sometimes the dollar signs are just too attractive to ignore.

Some of the acquisitions of big companies have seen the dreams of the lesser ones go into oblivion (Glancee App) or end up becoming more valuable (Instagram, Android).

The money the company offered to buy our business was too good to pass up, so we sold.

If you’ve been approached to sell your business or are considering looking for buyers, it’s an exciting time. But you’ve also got to be prepared for what lies ahead. Here are six things to consider before you sell-off your business:

1. Determine if you’re ready.
Before you begin the process, ask yourself one simple question, “If someone gave me X dollars for my company, would I walk away today?” Your answer will reveal how passionate you still are about your business. If you answered yes without hesitation, then you know you are mentally ready to move on and should seriously consider selling. Keep in mind that some business owners love what they do so much, no amount of money would entice them to sell -- and that’s OK.

2. Find an adviser you trust
Find a trusted financial adviser to provide an outside perspective on your balance sheet and valuation.
You may actually think to yourself that it's a brilliant deal based on the money offered, but a good evaluation of your business would give you a better perspective of the potentials it possesses.

3. Find a buyer who shares your vision.
After dedicating years of hard work and emotional energy to the business, it’s hard to just turn it over to anyone. This is particularly true if you have employees that will be staying with the business. The easiest way to overcome the twinges of guilt and doubt is to find a buyer who shares your vision, is willing to invest in the business, and has the ideas and resources to take it to the next level.

4. Make sure your books are in order.
If you think that bankers split every hair when evaluating your mortgage or business-loan application, just wait until you’ve got a potential buyer looking at your business.

You’ll need an up-to-date balance sheet, quarterly statements and at least two to three years of solid tax returns. The more profitable your tax returns are, the more you can typically get for your business. But this can be tricky, since you probably structured your revenue and expenses to minimize your tax bill each year.

5. Don’t assume anything until the last contract is signed
This is very important as you need to keep your business running until the very last papers of acquisition is signed. The old saying, “don’t count your chickens before they hatch,” may be cliché, but it’s particularly wise here. An American author once wrote that a small-business owner thought he had an $11 million deal to sell his company start-up and somehow took the pedals off his business services, only to find that the seller completely disappeared at the last minute.

Getting interest, even a signed letter of intent, is a great first step, but there’s still a long road ahead of you, with many possible outcomes. We advice that you keep business running along as usual until the very last minute.

6. Figure out what’s next.
When you are in the midst of the process, it’s natural to focus all your emotional energy on closing the deal, and you forget to think about what happens the day after the paperwork is signed. Overnight, everything changes: You suddenly go from having a major mission of growing a business to having no mission at all.

Think long and hard about what you want to do. If you plan on staying on, make sure you’ll be OK giving up your autonomy. If you don’t plan on sticking around, come up with a game plan for what to do with the cash. For example, you can start a new business, get involved in volunteer work or invest in other entrepreneurs. Just make sure you have a reason to be excited to get out of bed each morning.




Culled From Entrepreneur

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