Are You Ready to Sell Your Chicago Business? 5 Questions to Ask
Building a business is a lot like having a child. You invest much of yourself in your company, and parting ways with it is rarely easy.
Building a business is a lot like having a child. You invest much of yourself in your company, and parting ways with it is rarely easy. If you’re contemplating a sale, you might be reluctant to call a business broker to sell your business, hoping instead for an easy DIY undertaking. But before you put your business on the market, you have to ensure it’s ready—and that you are, too. Here are five key questions to ask before you sell your business.
Why do I want to sell?
Your business is your own. You can sell it for any reason, or for no reason at all. The buyer, however, is going to know what inspired your decision. They’re looking for evidence that the business is failing, or that there’s too much competition in your niche. So if at all possible, aim to sell when your business is thriving and leading its competitors. Otherwise you’ll have fewer interested buyers, and likely get a lower total sale price.
How much is my company worth?
Valuation is critical to a successful sale. Over-value your company, as many owners do, and no one will be interested. Under-value it, and you’ll leave money on the table. You may also deter would-be buyers who wonder why your business is selling for such a low price. A professional valuation can help you set the price just right—and dash any unreasonable hopes before they get out of control.
Who will buy my business?
Who is the ideal buyer for your company? It might be a competitor looking to expand, or a private equity firm looking to invest in a hot business. Selling your business requires you to look at things through the eyes of the buyer. What about your business might attract a buyer? Consider your ideal buyer, and then begin preparing your business with that sort of buyer in mind.
Do I have a good deal team?
Selling your business is likely one of the most complicated endeavors you will ever undertake. Don’t even think about doing it alone. A good business broker can help you navigate the process from start to finish. That includes marketing your company, screening buyers, negotiating the terms of the deal, and helping you with valuation. You’ll also need a skilled M&A lawyer who can help you determine how various deal terms might affect your walkaway price. The right accountant is critical for identifying how the sale might affect your tax liability.
What comes next?
Exiting your business without a plan for what you intend to do next is a recipe for disaster. It means you’ll still have one foot in the door of your company, making it more difficult to leave and increasing the odds that you self-sabotage. Even more importantly, identifying what it is you intend to do next can help you determine how much your long-term plans might cost—and therefore how much you need to earn from the deal to fund your next act.