What’s your worry?

Chances are there are plenty of worries for you.

Finding the right buyer for your company is a huge challenge. Making your company attractive to potential buyers is important especially go generate some interest. But the key is weeding out those prospects who either aren’t serious or lack the means or know-how to be a credible buyer. In my book, How to Sell Your Privately Owned Company, A Basic Guide for Independent Business Owners, Baby Boomer’s Edition, you’ll learn the value of a professional intermediary and how to tell a real buyer from the fakes. Here’s an excerpt:

A competent intermediary will be responsible for bringing the best buyer to your door. Part of this person’s duty is to eliminate “window shoppers” and “tire kickers,” and to carefully screen the more serious contenders and bring them – to meet you halfway – to the negotiation table.

But there is still a risk and a worry. There are a lot of people out there – especially among the ranks of first-time buyers – who are basically unrealistic. They have unfounded expectations of what they can afford and where they can get the financing. Even the most credentialed, well-positioned buyers are likely to raise a few questions and a few points on your blood pressure.

As a seller, you may have concerns common to other sellers. You may worry that …

• You might not be getting a fair price;

• You might not be paid on time;

• You might not be paid at all;

• The IRS will take all your profits from the sale;

• The new owner will run your business right into the ground.

With these ideas in mind, you have every right to ask the buyer this question: “Do you have the money to make this deal happen?” Then watch the reaction. Carefully listen to what he says about these things:

• Willingness to use his own home as collateral;

• The speed and ease of getting a small business loan;

• Uncertainty or vagueness about where to get financing, or from whom;

• Past credit history and experience with banks;

• Overconfidence about “Money is not a problem.”

What are YOU most worried about?  Take out a piece of paper and write it down.

Copyright © MMIX by ERV Productions Inc. All rights reserved. Except as permitted under the United States Copyright Act of 1976, no part of this publication may be reproduced or distributed in any form or by any means, or stored in a data base or retrieval system, without prior written permission of the publisher.

Eric R. Voth has been a successful business owner and seller since the 1970s. Among other enterprises, he is currently owner of ERV Productions Inc., and author of How to Sell Your Privately Owned Company.

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Buyers lose sleep too

As you prepare to market your privately owned company, you’ve probably looked back with a bit of pride as you’ve worked to build your empire, whether large or small. No wonder. You should be proud. But don’t let pride cloud your judgment about how much your business is worth or how attractive it is to the buyer. Put yourself in his or her shoes for a minute. This excerpt from my book, How to Sell Your Privately Owned Company, A Basic Guide for Independent Business Owners, Baby Boomer’s Edition, helps You the Seller get into the mind of the Prospective Buyer:

Even if they’ve done it before, and even if they’ve come prepared, buyers spend time mulling over possibilities and replaying conversations and scenarios when they are at the brink of making a deal. While you’re tossing and turning in your bed or in your head, your buyer is probably going through the same type of mental aerobics, trying to find solid answers to his concerns.

Perhaps he is wondering …

• Can I really afford to buy this business?

• Where am I going to come up with the money to do this?

• Am I paying too much?

• Is this business really what it’s cracked up to be?

Copyright © MMIX by ERV Productions Inc. All rights reserved. Except as permitted under the United States Copyright Act of 1976, no part of this publication may be reproduced or distributed in any form or by any means, or stored in a data base or retrieval system, without prior written permission of the publisher.

Eric R. Voth has been a successful business owner and seller since the 1970s. Among other enterprises, he is currently owner of ERV Productions Inc., and author of How to Sell Your Privately Owned Company.

An ounce of planning

One of the hardest things about owning a business you’ve poured your blood and sweat into is knowing when to let it go. But putting off such a crucial decision is still a decision. It could be the worst decision you’ll ever make.

Contributor Andrew Rogerson, a Certified Business Intermediary in Sacramento, Calif., has this to say in my book, How to Sell Your Privately Owned Company:

“In my opinion and from what I see working as a business broker, far too many business owners leave or sell their business too late. As a result, employees become jaded because they don’t think ownership cares enough, suppliers start getting paid late and become concerned, and customers don’t get the attention they have come to expect. The slow decline starts building momentum, which ultimately results in a lower selling price for the business if a willing buyer comes along at all.

“Selling a business is not a quick process. I would suggest it takes at least 12 months. For a more complex business it may take up to three years.

“Selling a company also includes using professional assistance to coordinate and manage the different areas of selling a business such as the marketing of the business; handling the legal contracts; negotiations with different parties including the buyers, landlords, accounting and legal parties; and ensuring the business is protected from nosy ‘tourists’ who have no interest other than wanting to know what’s going on.

“What’s the best time to start considering an exit strategy?  That answer is easy. Each successful company has a business plan.  It should be standard operating procedure to do an annual review of the business to see if the goals for the previous year were met. If goals were met, how and why were they achieved?  If not, same question.

“With the review of the business plan comes forward planning. This is the time to consider an exit plan for the owner of the business.  If the business plan is to move onward and forward for the next 12 months, then a plan with any changes will evolve.  Understanding those changes, be they subtle or dramatic, demands attention. Once they are understood, those changes need to be communicated and executed.  The changes may demand that the business be downsized until the next opportunity is clearly identified. Alternatively, it may mean retraining some or all of the team for the next opportunity.”

Copyright © MMIX by ERV Productions Inc. All rights reserved. Except as permitted under the United States Copyright Act of 1976, no part of this publication may be reproduced or distributed in any form or by any means, or stored in a data base or retrieval system, without prior written permission of the publisher.

Eric R. Voth has been a successful business owner and seller since the 1970s. Among other enterprises, he is currently owner of ERV Productions Inc., and author of How to Sell Your Privately Owned Company.

Be flexible on terms

How many deals have you seen fall through because one party or the other remained inflexible on the terms of the transaction? I’ll bet you’ve seen a few. Keep those lessons in mind when you negotiate terms of the sale of your business to a potential buyer. How to Sell Your Privately Owned Company has a few tips toward that end:

Rest assured

The best remedy for assuring a successful deal is to minimize the risks. This can be done by working through a careful and documented sales plan that allows you – as the seller – to establish the price while being flexible with the terms. If you realize that the terms are really what drives (and closes) the sale, you will be further ahead on achieving your long-term goals, regardless if they relate to financial success or just a peaceful night’s rest.
The flexibility of the sales terms usually means your willingness to accept multiple forms of payment from the buyer.

That’s why most deals happen somewhere in between the fantasies of the buyer and the dreams of the seller. And in many cases, this happy medium is struck through at least partial owner financing. In plain talk – you play the role of “banker.”

Copyright © MMIX by ERV Productions Inc. All rights reserved. Except as permitted under the United States Copyright Act of 1976, no part of this publication may be reproduced or distributed in any form or by any means, or stored in a data base or retrieval system, without prior written permission of the publisher.

Eric R. Voth has been a successful business owner and seller since the 1970s. Among other enterprises, he is currently owner of ERV Productions Inc., and author of How to Sell Your Privately Owned Company.

After you’ve sold your business

A lot of people wonder what they’ll do with all the spare time they’ll have once they sell their business. After all these years devoted to the business, you’ve earned some time off. So what do you do? Good question. Here’s an excerpt from my book How to Sell Your Privately Owned Company:

What’s your plan?

After the sale of your company, what do you plan to do – after, of course, entering that healthy deposit in your checkbook? Write it down.

Your personal plan

Remember all the hours and thoughts you spent planning to go into business in the first place? Well, you’ll have to apply the same basic strategies to get out of
business – or at least out of the business mind-set – to have a smooth transition.
Prepare a personal plan to cover this next phase of your life. Regardless of how small they are, start putting these plans into action – immediately. If you plan to travel, buy the tickets. If you plan to jump into a hobby, buy the supplies. If you plan to consult, print your new business cards and start making a few prospective phone calls.
To be a business owner, you obviously have success traits that point to planning and follow-through. Perhaps you might think that you’d like to spend the rest of your life sitting on the couch and watching old movies. But the fact is, you’d soon be dissatisfied with that agenda.
You will have to decide what “having enough” means to you, when you want to stop, when it’s time to move on to something else.
The question, then, is: Where do you go from here?
• What new phase of your life do you want to enter after you have climbed the mountain and reached the top?
• Do you somehow want to stay involved in the business after it’s been sold, working in some capacity with the new owner?
• What are you going to do with all of your money? How many speedboats can
you ski behind?
The answers to these questions may lie in the reordering of your personal priorities. Perhaps you want to put money away for retirement, or invest it for more immediate gain. Maybe you want to begin contributing more to society, get involved in politics, nonprofit boards or charities. Or maybe it’s a time to take an in-depth look at your entire life.

My book, How to Sell Your Privately Owned Company – Baby Boomer’s Edition, has more to say about that.

Copyright © MMIX by ERV Productions Inc. All rights reserved. Except as permitted under the United States Copyright Act of 1976, no part of this publication may be reproduced or distributed in any form or by any means, or stored in a data base or retrieval system, without prior written permission of the publisher.

Eric R. Voth has been a successful business owner and seller since the 1970s. Among other enterprises, he is currently owner of ERV Productions Inc., and author of How to Sell Your Privately Owned Company.