My Father often told me, “Time is the great equalizer”.  After spending years building and operating a family-owned businesses, many of us come to the same conclusion.  After all, you can always make money, but you can’t make time.  So, when do you finally hand the reins of the business over to someone else?

Once the decision has been made to sell your business, most business owners go over litany of possible downside risks.  How much is my business worth? Will a buyer really be willing to pay a fair price for the company? What will I do once the business is in someone else’s hands?  Can I replace the business income stream and maintain my lifestyle?   And then there are other risk-related concerns to consider. What if my competitors find out about my plans to sell, prior to close?  Am I risking losing my key employees?  What about my customers and suppliers?  Will they continue to support my company, business as usual? Let’s take just a moment to consider some of these possible worries and concerns from your perspective.

Will I have second thoughts once the business is sold?  

While this thought may not seem important when you consider pulling your equity out of the enterprise, it really is a BIG CONCERN.  If your experience is anything like mine was, having spent the better part of 20 years creating and operating the company, you may find yourself to be a little “lost” once the keys are in the new owner’s hands.  You may miss some of those long hours at work, the platinum airline status, the many perks, and more importantly – just overseeing the business.  It’s one thing to think of the freedom from day-to-day operating the business with all the worry and lack of sleep you went through in those early days.  It’s quite another to find yourself on the outside looking in, and in a place where no one is really interested in hearing your thoughts on direction for the company.  Once you pass the torch to your successor, being “out” can be a lonely spot to find yourself in. So, are you ready to sell your business?

Can I sell my business and maintain my lifestyle financially?

This is another important consideration.  In my experience, owning and operating a small manufacturing company had its upsides as well as downsides.  For me, making a great income, the many perks that come with success (i.e., company paid vacations, a nice retirement account, use of the company airplane, and even the business meals) were all things that I had become used to.  After all, most entrepreneurs are driven to develop and operate their own business to be free from dependence and responsibility to another entity.  But can you afford to sell the company, if you intend to continue living as you have become accustomed to?  Recreating another income source can be a lengthy and often discouraging experience for owners who have grown accustomed to relying on what they built in the first place.  It could just be that the devil you know is more manageable than the one you don’t.

What is involved in business valuation, and who would pay a fair price?

Business Valuation is a complicated and ever-evolving science.  But speaking from a layman’s point of view, your business is worth what a buyer is willing to pay.  Buyers purchase businesses for many different reasons, and often a strategic buyer who is looking to buy and hold, will end up bringing the better opportunity for the seller.  An astute buyer will often hire their own professional advisors (accountants, attorneys, brokers, valuators, bankers, and industry specialists) to help them arrive at an offer that they can live with.  So, assuming you receive an offer for your company, how do you know whether the offer is right for you?

Business Valuations are generally based upon a purpose and are intended to arrive at a number that represents a term such as fair value, strategic value, book value, etc.  Depending upon the size and complexity of your business, you may wish to field your own team of advisors, to help prepare the business for sale, market the business, and shepherd the process from beginning to end.  An important consideration for the seller would be whether to have their own valuation completed, as a check against any offers from buyers.  Often this makes the most sense from the seller’s point of view. 

What if the word gets out, before the contract is signed to sell my business?

The best laid plans of mice and men, right?  Confidentiality is paramount in M&A transactions, and all parties working the deal should be aware of this concern.  This includes both sides (buyer and seller) in addition to their people and trusted advisors. After all, “it ain’t over till it’s over” and you can’t un-ring the bell.  Having said this, we always plan for leaks and learn to expect the worst while going through the deal process.  

Is it possible that you might lose key employees, or have negative ramifications or feel risk from customers or suppliers?  Sure, this is possible.  What about competitors?  Could news of your possible change in control transaction allow them advantages with your customers.  Possibly, but at the end of the day most everyone is in business to be successful, and word of your transaction may not prove to be front page news after all.  

Having made the forgoing points, be sure and discuss these concerns with your advisors before you engage their services to sell your business.  An experienced and well thought of M&A Advisor will present you with a host of options related to confidentiality.  These could include such things as offsite meetings, code name for the project, use of a private and secure email address for communication, etc.  Often, word of a possible business sale leaks out from the seller’s business first. For this, and other reasons you may want to consider how the transaction will affect your employees and bring them into the loop earlier than later in the process.  Having completed many transactions as both seller and advisor, it has been my experience that being sure to take care of your employees post close (after the business sale), truly lends a much more positive and helpful attitude throughout the months of negotiation and due diligence. Generally, honesty with employees, improves the process for all.

Before you begin the process of selling your business.

In summary, it is important to take some time and consider these and other concerns and risks involved with the sale of your business. Every transaction is different, but in our experience representing parties in business sale transactions, the process generally takes 12 to 18 months. That can be a long time to live with concerns and worries.   For this reason we always suggest that our clients consult with their professional team of CPA’s, your attorney, and a well-qualified M&A advisor to discuss what will be involved.  

Finally, having gone through the sale of a business many times as both the seller and the advisor, the one thing that always seems to stand out is “the seller’s need to stay the course – business as usual”.  After all, the buyer is interested in purchasing the business opportunity that they saw in the first place, and nothing less.  You need to maintain the business performance throughout the process.  For this reason, it is usually best for the seller’s transaction team to concentrate on selling process, while the owner/seller “sticks to his/her knitting” and operates the business.

Ready to start a conversation about your business?  You can reach Todd Warner at (559) 294-8000 or email at tw@AgribusinessBrokers.com., or find additional info at https://agribusinessbrokers.com/ Todd Warner is an entrepreneur and experienced owner/ operator of both manufacturing and service businesses.  He owns and operates Agribusiness Brokers Corp, a Clovis, California based Mergers & Acquisitions Advisory representing Agribusiness and Industrial companies. As an M&A Advisor he has represented Middle-market business owners in successful M&A engagements, in New York, Illinois, Minnesota, California and Hawaii.  Mr. Warner holds various certifications including CVA, CM&AA, and CMAP and is a licensed Real Estate Broker in California (DRE 01737715) and FloridaAdditionally, he is a FINRA Registered Representative: Series 7 (General Securities Representative), Series 63 (Uniform Securities Agent State Law), Series 79 (Investment Banking Representative) and the Series 82 (Private Securities Offering) as a representative of StillPoint Capital, LLC, Member FINRA and SIPC, Tampa, FL.