Planning a Sale of a Business Takes Time

We have witnessed business owners who spent more time planning for a wedding (theirs or a child’s), their 25th or 50th wedding anniversary, and even a fantasy football draft, than planning for the sale of their business.

According to the quarterly Market Pulse Report, we know that when it comes time to sell their business, fewer than 50% of all business owners plan ahead. What that means is that most business owners have some kind of trigger that pushes them to go to market. Unfortunately, the typical triggers are reactive and often negative in nature. Negative triggers can be a family health issue, conflict, or (most commonly) burnout.

According to Christopher Snider, CEO of the Exit Planning Institute, 50% of business owners exit because of one of the five “Dismals Ds”: death, divorce, disability, distress, or disagreement.

Often, the business performance is less than optimal and in many times, may actually be declining. Even if there is not a decline, the business owner hasn’t planned or had time to make specific changes that would put their company in a better position for sale or transition.

Selling a well-prepared business is a completely different experience than selling due to a triggering event. You have more leverage, and the process is less stressful as you are proactively executing a strategy versus reacting to an event in your life. With planning, you’ll be able to walk away from the closing table feeling satisfied and confident you made the right choices.

Yes…you may be able to sell your business without planning. However, the more you plan, the more options you have when you decide to exit. A well-prepared business owner with an attractive business tends to receive more offers, greatly increasing one’s leverage in order to leave on your terms – financially, personally, and professionally.

The holy grail is when you are prepared, you are emotionally ready, and the M&A market is at a peak. If you are able to hit this trifecta, you typically win in terms of value and structure. Additionally, the sale process will go faster, reducing the inevitable emotional turmoil for you.

Not everyone achieves such perfect synchronicity, but chances are significantly better with a planned strategy. Whether you’re 10 months or 10 years away from exiting your business, take time now to truly think about what, when, and how you will leave. What are your terms? Is it financial or taking care of employees or leaving a legacy or … or a combination of such?

Have a conversation with an M&A advisor. It doesn’t mean you have to sell right away. However, you will walk away better educated about your exit options, the type of buyers, the importance of timing, and how the process works. 

Leave a Reply

Your email address will not be published. Required fields are marked *