At some point, you will need to sell your business. When the time comes to put your business on the market, it is in your best interest if your business has a dominant position in the market. Potential buyers will be far less excited about your business if you are playing catch-up to one or more competitors. In the end, maintaining a dominant market position will help you receive both maximum interest and top dollar for your business.

Take Steps in Advance

Preparing your business to be sold isn’t something that you do overnight. Instead, preparing your business for sale is a process that can take years of meticulous planning. Operating your business as though you will need to sell it soon is always a smart strategy.

Boost Your Customer Base

A key part of maintaining a dominant position in your market is to have a large number of customers. The logic is simple: if you have a large number of customers, then it only makes sense that your competitors have fewer customers. 

A prospective buyer will find your business more interesting when you have a wide and varied customer base. Conversely, a business that depends on just a few large customers may make buyers nervous. The built-in vulnerability of having a handful of key customers will send many prospective buyers looking for the exit ramp.

Have a Growth Mindset

Achieving a dominant position in the market means that you are always thinking about growth. It is vital that you consider how to expand your business in both the short term and the long term. Additionally, it is important to realize that different strategies are needed for both short-term and long-term growth. You should always have a growth plan ready to implement.

Gain a Realistic Understanding of Your Business

Whether you have achieved a dominant position in your market or are striving to do so, it is essential that you understand your business’s strengths and weaknesses. 

Far too many business owners turn a blind eye to the weaknesses of their business or overplay its strengths. One way to better understand these aspects of your business is to work with a business broker or M&A advisor who can evaluate your business from an outside perspective.

You want prospective buyers to be excited about your business and its potential for the future. Demonstrating that you have a dominant position in your market and that your business has room for potential growth will dramatically increase buyer interest and enthusiasm. Business owners looking to achieve top dollar will want to take the necessary steps to achieve a dominant position in the market.

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It is easy to get lost in the numbers when it comes to selling your business, but it is important to remember that the numbers only tell one side of the story. Both buying and selling a business come with significant mental and emotional ramifications. 

Why is this so critical to understand? Sellers who are not emotionally ready might subconsciously take steps to interfere with the sales process. Typically, sellers have invested a great deal of time and effort into their business, and as a result, they may simply not be truly ready to sell. Before the day comes to put your business up for sale, pause and reflect on whether you are 100% onboard. 

Let’s take a look at some of the questions to ask yourself so that you can decide if you are truly ready to sell.

Do You Have Future Plans? 

Topping the list of emotional factors that you need to consider when selling are your plans for the future. If you don’t know what your plans are for after selling your business, you may encounter difficulties post-sale. 

Far too often, business owners discover that they don’t know what to do with themselves after a sale has taken place. All the mental and emotional effort put into running a business has to be redirected once the business has been sold. It is crucial that before you sell your business, you have something new and exciting to work on in the future.

Do You Have a Strong Support Network?  

A second emotional factor to consider before you sell your business is whether or not selling it will lead to social isolation and stress. It is very common for business owners to form long-term friendships and bonds with numerous employees. 

Quite often, business owners begin to feel as though their employees are something like extended family. Suddenly not working with that extended family can bring with it a fair degree of social isolation. 

It is not uncommon for business owners to have many of their social needs met at work. Once those friendships are gone, many business owners can feel isolated, and isolation can lead to stress and a sense of regret. It is prudent to make sure your social network is robust enough that selling your business doesn’t lead to unexpected mental and emotional stress.

Selling a business is a massive decision for most business owners. It is a prudent move to be sure that you actually do want to sell. Once your business has been sold, there is no turning back.  

The last thing any business owner wants is to sell their business only to discover that they regret the decision. Don’t simply focus on the profit to be gained when selling your business, but also on the ramifications of that sale on your life and future happiness.

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Eventually every business owner needs to sell or think about who will take over their business when they retire. Working with an intermediary is an easy and streamlined way to jumpstart the process and learn what mistakes to avoid. A business broker or M&A advisor can help you to understand what steps to take to achieve optimal results. 

Teamwork Makes the Dream Work

First, it is simply critical to understand that selling a business is a team effort. No seller should begin working with an intermediary with the idea that the intermediary will do “all the work.” The reality is that in order to achieve a successful sale, it is necessary for the seller and the intermediary to work closely and engage in a good deal of communication. 

Other key people such as executives and advisors will also have to work closely with your business broker or M&A advisor. Without a doubt, selling a business is a group effort that will need cooperation from many parties. For example, you’ll also need the cooperation of key management and team members when a prospective buyer visits the business.

Prepare for an Extended Process 

Another essential point to remember is that selling a business can take time. It is common for the sales process to take between six months to a year, but it can also take even longer than that. Sellers should enter the sales process realizing that they will be working closely with their chosen intermediary for a considerable period of time. That means that you’ll want to be sure to keep your intermediary well informed regarding any developments with your business for an extended period of time.

Be Open to Ideas 

Third, remember that your intermediary has invaluable experience and that you hired them to guide you through the process. It is not necessary that you blindly follow all their advice; however, it is essential that you be receptive to all their suggestions. 

Your intermediary may have years, if not decades, of proven experience selling businesses just like yours. It only makes sense to take advantage of that experience as much as possible. Your intermediary may have suggestions about what type of buyer you should be targeting or they may even have ideas as to how you can change your business to make it more attractive to prospective buyers. When intermediaries know that they have a receptive audience with a given buyer, they will feel more comfortable providing valuable suggestions.

The time to contact an intermediary about selling your business is now. Getting a business ready to sell takes time, effort and preparation. The sooner you begin working with a business broker or M&A advisor, the sooner you can begin charting a path to eventual success.

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Few business owners truly understand the complex dynamics of making a deal. Having never participated in selling a business before, the majority of business owners are blissfully unaware of what it takes to turn the dream of selling a business into a reality. Having a brokerage professional by their side is an easy way for a business owner to avoid the dangers that can easily torpedo a deal.

Keep Your Eye on the Ball

One of the most common reasons that businesses will fail to sell is that the business owner becomes obsessed with the pending transaction, and in the process, fails to keep up with the day-to-day operations of the business. The sales process can take months, or even years, and that means that the owner needs to pay attention to every aspect of their business or a prospective buyer could become very concerned.

Keep Confidentiality a Top Priority 

Another mistake that business owners can make, one that will quickly kill a deal, is a breach of confidentiality. If the sales process involves too many parties, then confidentiality often falls apart. Often the owner will call off the deal in frustration. A business broker or M&A advisor understands the tremendous importance of maintaining confidentiality and will prevent leaks from occurring. 

Seek Out Another Perspective

Being the boss for years, or even decades, means that a business owner may become rather set in their ways. Commonly, business owners may become rigid where compromises are concerned, especially when it comes to their business. As a result, a business owner may wish to negotiate every single item and detail which can send buyers running for the door. Some fights make sense and others should be avoided. Everyone can benefit from this essential third-party perspective, and this is another of the important ways that business brokers can help sellers.

Prepare Early

It can take years to properly get a business ready for sale. All too often, business owners will not prepare for the sale of their business until the 11th hour. Some business owners may even decide to sell on a whim or because of burnout. Unless a business owner prepares for the sale of their business well in advance, the business is unlikely to be ready to be sold. 

A business broker or M&A advisor knows precisely what it takes to get a business ready. For example, some areas that are particularly important for business owners considering selling a business are buying out minority stockholders, dealing with any pending lawsuits and cleaning up their balance sheet.

Keep Your Pricing Realistic

A fifth deal killer comes in the form of placing too high a price on a business. It is understandable that a business owner wants to receive top dollar as a business usually represents an owner’s life work. However, an unrealistic asking price can quickly destroy any chances a business has of being sold. A business broker can work with or without an appraiser to achieve a fair and realistic price and in the process dramatically increase the chances of a successful deal.

Buying or selling a business can have many twists and turns. Working with a brokerage professional stands as one of the simplest and most effective ways to avoid problems before they arise and, in the process, save the deal.

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If you own a family-owned business, you may feel as though there are more factors to consider when it’s time to sell. In this article, we’ll examine some of the best options that business owners can use. You’ll want to keep in mind that both internal and external strategies are available to you. Let’s take a closer look. 

3 Types of Internal Transactions 

One of the top options for selling a family-owned business is to simply transition the ownership of the business within the family. This is an often-exercised option for many reasons. For example, one of the benefits to this strategy is that selling a family-owned business to a relative will keep the business in the family. Oftentimes this decision best suits the emotional preferences of the owner. A major risk is that the family member will fail to operate the business successfully, and this point underscores the importance of only transferring ownership to a family member that is ready for the task.

A second option is what is known as the Employee Stock Ownership Plan (ESOP). ESOPs are often utilized in companies when selling to a third party could prove to be problematic or difficult. Architectural, construction and engineering companies are all good examples of businesses that can be difficult to sell to third parties.

Choosing to hire a CEO who manages the owners exit strategy is a third option for business owners to consider when selling. This is a time-tested strategy that many business owners have appreciated. Using this CEO strategy allows the owner to essentially retire and live off of company dividends while at the same time delaying the sale of the company for years.

External Transactions to Consider

The previous three examples specifically focused on internal transactions. Now, we’ll turn our attention to external transactions, as there are several viable external transactions that work for family-owned businesses looking to sell. 

A management buy-out or MBO, is an option that shouldn’t be overlooked. Selling to key employees with the company has many pros, for example, key employees understand the business as well as its current and future challenges and potential.  An MBO does have negative aspects to consider such as the fact that owners typically don’t receive the highest possible asking price as they have to provide financing.

A second external transaction for a family-owned business is an outright sale to a third party. One pro of a third-party sale is that an all-cash closing is possible and after the transaction is settled, the owner is free of the business. A potential downside of a third-party sale is that the sale process could be lengthy.

A third option for family-owned businesses to consider is an initial public offering (IPO). Companies with revenues of $100+ million are seen as a potential candidate for IPOs. An IPO can receive a high valuation; however, it is important to note that management will need to remain with the company.

Business brokers and M&A advisors are experts in helping family-owned businesses chart the best path forward. No two family-owned businesses are the same. An experienced brokerage professional can evaluate your business and help guide you towards the sale option that makes the most sense for your business and your personal situation.

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A key part of the American Dream is the notion of being financially independent and controlling one’s own fate. While times have changed, the idea of the American Dream is alive and well. Entrepreneurs have long realized that one of the quickest ways of achieving this dream is to own a successful business. 

The majority of today’s buyers are well educated and come from the corporate world; however, they are typically not versed in the business buying process. Since these buyers are coming from the corporate world, they are fact-driven, meaning that they want to see the numbers and will pay attention to details both large and small. You can expect these buyers to want to see all necessary supporting documents. They will want to verify everything themselves. Additionally, you can expect them to employ many outside advisors. Summed up, today’s buyer is not an easy sale.

Another key fact about the modern buyer is that they are often what can best be termed as “event driven.” These are buyers that not only want to control their own destiny, but also need to buy a business for some other practical reason. For example, perhaps their current job was downsized or they were transferred to a location where they did not want to move. It is common that people don’t have the courage to quit their current job and say goodbye to the safety of a steady paycheck in favor of a leap into the unknown. It is quite common that there needs to be an event to stimulate the change.

Business brokers and M&A advisors seek to protect their clients while moving them closer to their goals. One of the ways that they can achieve that is by working with only serious and qualified buyers. The process of matching the right buyer to the seller involves asking a series of important questions such as the following:

• Why is the person considering buying a business? 
• How long have they been looking? 
• What kind of business are they seeking? 
• How much money do they have available? 
• Have they ever owned a business before?

Every business is different. It should come as no surprise that each buyer out there has a different story and different goals. A one-size-fits-all approach to buying and selling a business simply doesn’t provide optimal results. Working with a qualified business brokerage professional is the easiest way for a seller to not only find the right buyer, but do so with the least stress possible.

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It takes a lot of work to buy or sell a business. When a once promising deal is not successful, this can be due to a wide array of reasons. However, understanding the reasons why a deal can fall apart in advance can serve to dramatically increase your odds of success.

Some of the reasons that deals fall apart are reasonable, while other reasons, to be blunt, are unreasonable. Let’s take a look at four common reasons that are seen in the world of business brokerage. 

Reason 1- Financial Issues on the Buyer’s End 

One of the most common reasons that deals fall apart is that buyers simply can’t find the needed financing. Working with a business broker or M&A advisor is a way to safeguard against this outcome, as an experienced brokerage professional knows how to pre-screen prospective buyers to increase the odds of success from a financial standpoint.

Reason 2 – Lack of Financials on the Seller’s End 

A second reason that deals fall apart is that the seller doesn’t have all of their financials in an up-to-date form. Sellers must constantly strive to put themselves in the shoes of a prospective buyer. Virtually no serious buyer would move forward with a deal without having a clear picture of the finances of the business. This is an issue that can be circumvented with the right level of planning and preparation. 

Reason 3 – Last Minute Surprises

A third common reason that deals fall apart occurs when a surprise happens at the last minute. It is almost impossible to safeguard against every possible surprise, however, an experienced business broker knows how to navigate the due diligence process so as to dramatically reduce the chances of unexpected problems. Again, brokerage professionals have tried and tested techniques which help reduce the chances of these unwanted surprises. 

Reason 4 –Business Issues Left Unaddressed 

Preparing a business to be sold isn’t something that happens overnight. Sellers should expect that any serious buyer will do more than “kick the tires,” but will instead have their experts go over every aspect of the business. Administrative, environmental, or legal issues that have not been properly addressed can serve to raise many red flags. Needless to say, this can scare prospective buyers away from a business. There is no replacement for proper preparation and meticulous due diligence months or preferably years in advance.

At the end of the day, there are many reasons that a deal can fall apart. Buyers and sellers simply can’t safeguard against them all. However, an experienced business broker or M&A advisor can often see problems on the horizon. Plus, when you work with an experienced professional, it can help keep emotions in check. It’s important to keep all parties involved focused on success. With the right team in place, it is possible to dramatically decrease the chances of surprise events ruining what would otherwise be a good deal.

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