Selling Your Business the Right Way
If you don’t treat your exit strategy with the same respect you gave your growth strategy, you could cause unnecessary harm to your old business—and your bank account.
According to estimates from 2017, only 20%-30% of businesses that hit the market actually find buyers. Small business owners often keep most of their wealth tied up in their companies. When you reach a turning point and decide to sell—but can’t find a suitable buyer—you could lose your life savings by walking away without a plan.
The risks may convince some business owners to take bad exit deals, but with a little planning, you can execute a transition that works for both buyer and seller. Whether you offer your company to longtime employees or sell your stake to an investor, you’ll make more money if the deal makes sense for both sides. To get to that point, however, you must first ensure that your role at the company won’t hold up a potential deal.
“If a business owner wants to make their business attractive for sale at the highest price the market will bear, the owner’s role has to be relatively easy to transfer,” notes Michael Lefkowitz, author of “Where’s the Exit,” an exit planning book for business owners. “He or she has to work on the business and not in the business.”
As tempting as it is to do it all yourself, you can’t remain an essential component of your company’s functions and expect to sell your business. Before you make your exit, you have to take some time to step away from daily operations, polish the appeal of your brand, update your books, and build up the capability of your subordinates. Only by making yourself replaceable can you open the door for a successful transition.