Business Sale Considerations
As you go through the steps already discussed, you will be making important decisions about selling your business and may have more to make. We recommend that you know the following before you put your business on the market:
- The price you want and whether that is achievable
- You have the right advisors
- You are really ready to sell
- Whether there are things you can do that might get you a better deal in the future
Other decisions will require more input from your advisors. For example, you need to know how you should structure the deal. Should you take an earn-out? Will you provide seller financing? Will you stay on to run the business and, if so, how long? Your business intermediary will help you answer these questions.
Similarly, your business intermediary will help you decide who should buy your business. Potential buyers include family, current management, strategic buyers within your industry and private equity groups or financial buyers. Your business may be attractive to one or more of these groups.
Identifying the ideal type of buyer is important because different buyers will value your business differently. If you approach the wrong kind of buyer, you may get lower offers than you would if you had approached the right type of buyer. The right type of buyer is the strategic buyer — the one that has the most to gain —and the strategic buyer will often yield the highest price and best terms.