Strategy: Exit the Stage Right
Your personal networking also is important, and you’ll have to play a larger role in this process than you might like. A smaller business may not be as attractive as a larger one. It takes almost the same amount of due diligence to acquire a large firm as it does a small one. Again, rely on your industry friends and business partners to find the right buyer for you.
Play Your Cards
Keep your thoughts close to your chest.
Remember the adage: “A card laid is a card played.” It’s not always good to tell a prospective buyer how much you want for your business. Let the buyer make the first offer.
On the other hand, a prospective buyer wants to know how much you’re asking for your business before he or she even will talk to you. If you set a price in the beginning, you run the risk of setting it too low. Remember, a strategic buyer might be willing to pay more.
Understand Asset vs. Stock Sale
While you might prefer to sell your stock, a buyer will want to purchase assets. A buyer won’t want to purchase your debt. He or she may be willing to assume responsibility for the accounts payable, as long as they’re current and supported by inventory. This will be a negotiable item.
A buyer also wants to purchase assets so they can be revalued on the balance sheet. The new owner may elect to establish a value for the housefile, which typically is an off-balance-sheet asset. The point here is to understand what you’re selling and why. Consult with your accounting firm.
Should You Stay on the Team?
A buyer will want you to sign a non-compete agreement to keep you from starting a competitive business or working for a competitor. As part of this, assuming you like and respect the buyer, negotiate an employment agreement. Most likely, the new owner will see an advantage keeping you on the team for a time period (e.g., one to three years). This can be an important part of any sale, assuming both parties are compatible and get though the sale process amicably.