The decision to sell your business can be a difficult one.
As the owner your business becomes a significant part of your life providing both reasons to celebrate and challenges to overcome. Like many business owners before you, you have invested your energy, time and resources into growing your business into an enterprise that is worth having your legacy continue.
The successful transition to new ownership requires both preparation within the organization and engaging expertise to manage the challenges in the marketplace.
Testing the marketplace for suitable Buyers raises many aspects to consider:
Every journey begins with the first steps.
As the business owner you have a solid understanding of how and why your business works in the marketplace. The first steps for the process of selling your business should include gathering and preparing the documentation that allows the Buyer to develop an understanding for your business model. Depending on your model this may be a simple case of ensuring your day to day documentation is current. For other business owners this may require a considerable investment of time and resources to develop current documentation to present. The MAXIMA team utilizes a proven system for preparing your business documentation to support appropriate business valuations, business model descriptions, and to develop your business profile to present your “best face” forward.
Statistically this has a 75% failure rate for second generation owners. When selling your business to your family you have to consider the consequences of payments over a longer period of time and potential risks of the loss of the business before you’re fully paid out. It is critical you work through the process of coming to agreement on what your role will be after you all sign off on the deal, and how you exit the day to day operations of the business.
The Risk: This has to include risk mitigation issues like your name coming off of guarantees, security agreements etc. MAXIMA has a proven effective process to work with all parties to establish a formal “fit for purpose” sale of business model to complete the sale.
While many times existing personnel are interested in taking over and buying the business, the challenges start with the Buyer looking for a “good guy” discount; “after all I have worked here and helped you make this business what it is so I should get a discount”. Another key concern when selling your business to your employees is the process of determining where the funding to buy you out comes from. How will the employees come up with the funding and the collateral for the deal? Unfortunately, many employees lack capital.
The Risk: This structure typically includes determining how much vendor financing you will carry after the sale and the risks involved. As the business owner you need to have the ability to protect your investment if the business starts to wander from the course you have built. Management buy outs definitely can work, however both sides need to be well prepared for the challenges and time frames to complete the process.
Many Business Brokers feel this is the easiest solution. Selling your business to a Competitor can result in the highest price, but is full of risk to you and has little consequence to the Competitor. You have to show them everything about what you do and how you do it. Generally business owners underestimate the risk associated with this solution for exiting your company. By the end of the Due Diligence process that Competitor will know your clients, your staff, your profit margins, your “secret herbs and spices”, your future upside, and still have the ability to walk from the deal.
The Risk: This all spells MAJOR RISK! When selling your business to a competitor you must find deliberate ways to reduce that risk. MAXIMA has a history of successfully managing competitor acquisitions with proven methods to reduce our clients’ exposure to risk.
While a Buyer outside your market space may be the most challenging to find, they represent a market that will pay fair market price (or higher). An outside Buyer knows they have to provide a clear model to have you paid out in the appropriate period of time. MAXIMA has developed proven channels and means to find quality Buyers, including international Buyers.
The Risk: Typically this market carries the lowest risk to vendor/owners of the business.
It’s this simple:
Seller’s priority: To get the best deal possible (highest price with the shortest payout).
Buyer’s priority: To get the best deal possible (lowest price with longest payout).
The MAXIMA Group has a proven history of successfully achieving completed transactions. Each solution is structured around your personal priorities, goals, and expectations. Our team is available to discuss your individual requirements and opportunity in a Confidential Interview process. This “no obligation” discussion provides you with a high level “road map” to successfully achieve your exit strategy goals.
#1 Goal: We Champion your exit objectives in a timely, efficient, and professional manner.
#2 Goal: To make best use of proven “Best Practice” processes and strategies to successfully sell your business.
#3 Goal: At MAXIMA we manage the process of selling your business so you can focus on managing your business.
MAXIMA will only represent one side of any deal.
MAXIMA will act on the BUYERS’ behalf or the SELLERS’ behalf; but never both.
Wondering if you have a sellable business? Contact us for a free consultation.