When Is the Best Time to Sell Your Business?
In the life cycle of every business, "Selling The Business" is an issue that is sure to come up sooner or later.
This is also referred to a exit or succession planning.
With some businesses it can come unexpectedly.
The owner becomes seriously ill and is forced to exit the business.
While not an easy subject to deal with, it can happen.
And when an owner must leave his/her business because of illness, in addition to emotional toll on the owner's family, just imagine the implications for the on-going business.
So what the are the typical scenarios faced by business owners operating well established businesses as they view their options? Possible Final Options 1)Do I work top the Final Day? 2)Do I turn it over to the children? 3)Do I sell to my employees? 4)Do I sell to an outside buyer? 5)D I offer it to a competitor? For the owner who decides to stay until his "final day," he does retain all of the decision making and control of the company.
If, however, he takes no action and avoids the hard decisions of succession, he places the company at significant risk in terms of its management transition and operating continuity.
Issues of fairness pertaining to family members and key subordinates will remain unresolved and the day may come when it just may be too late for a smooth and comfortable exit strategy.
Basic to the issues faced by the present owner is the real world value of the business.
Because in all of the scenarios noted above, the business value will play a critical partin determining the future of the business.
A Sample Case A hypothetical owner has operated a business by utilizing contemporary management skills in that the overall motivation, morale and momentum of the firm is excellent.
He has also recruited and developed a high quality high energy staff, armed the operation with an effective management information system, plus installed controls and inter-department communication leading to teamwork which has enabled the firm to achieve double digit growth over the past ten years, The above example points out that the owner of the business is probably an ardent planner who will no doubt take very carefully considered steps to formulate a blueprint to smoothly exit the business, in view of its quality people and presumed $ value.
But many business owners are not gifted with a proclivity for planning, or developing people and yet their businesses are profitable and continue to grow and flourish.
I these businesses the firm often grows because of the owner's keen insight into identifying and satisfying the needs and expectations of customers and clients.
A Path To Follow If you are like most business owners, when the value of the business goes beyond say, $500,000, the need for successful planning becomes a priority.
The key, of course, is learning the firms value.
Two good rules to follow are:1) If your business is 5 years old or older, take the initiative to have it valued by a professional business valuation expert (a firm or individual who does nothing but specialize in business appraisals).
Having its value "in your pocket"enables you to deal effectively with that call you can count on getting from some "larger entity" in your niche which may have their eyes on your firm as a possible acquisition target.
2) If your firm is 20 years old or older, a professional valuation becomes vital since your whole way of thinking, as well as your priorities about succession will no doubt change once you learn its real world market value.
So when is the best time to sell your business?When you are aware of its real world value and when the planning for a smooth exit transition is behind you.
Its kind of like advertising .
.
.
.
it doesn't cost, it pays.
Good Luck!!
This is also referred to a exit or succession planning.
With some businesses it can come unexpectedly.
The owner becomes seriously ill and is forced to exit the business.
While not an easy subject to deal with, it can happen.
And when an owner must leave his/her business because of illness, in addition to emotional toll on the owner's family, just imagine the implications for the on-going business.
So what the are the typical scenarios faced by business owners operating well established businesses as they view their options? Possible Final Options 1)Do I work top the Final Day? 2)Do I turn it over to the children? 3)Do I sell to my employees? 4)Do I sell to an outside buyer? 5)D I offer it to a competitor? For the owner who decides to stay until his "final day," he does retain all of the decision making and control of the company.
If, however, he takes no action and avoids the hard decisions of succession, he places the company at significant risk in terms of its management transition and operating continuity.
Issues of fairness pertaining to family members and key subordinates will remain unresolved and the day may come when it just may be too late for a smooth and comfortable exit strategy.
Basic to the issues faced by the present owner is the real world value of the business.
Because in all of the scenarios noted above, the business value will play a critical partin determining the future of the business.
A Sample Case A hypothetical owner has operated a business by utilizing contemporary management skills in that the overall motivation, morale and momentum of the firm is excellent.
He has also recruited and developed a high quality high energy staff, armed the operation with an effective management information system, plus installed controls and inter-department communication leading to teamwork which has enabled the firm to achieve double digit growth over the past ten years, The above example points out that the owner of the business is probably an ardent planner who will no doubt take very carefully considered steps to formulate a blueprint to smoothly exit the business, in view of its quality people and presumed $ value.
But many business owners are not gifted with a proclivity for planning, or developing people and yet their businesses are profitable and continue to grow and flourish.
I these businesses the firm often grows because of the owner's keen insight into identifying and satisfying the needs and expectations of customers and clients.
A Path To Follow If you are like most business owners, when the value of the business goes beyond say, $500,000, the need for successful planning becomes a priority.
The key, of course, is learning the firms value.
Two good rules to follow are:1) If your business is 5 years old or older, take the initiative to have it valued by a professional business valuation expert (a firm or individual who does nothing but specialize in business appraisals).
Having its value "in your pocket"enables you to deal effectively with that call you can count on getting from some "larger entity" in your niche which may have their eyes on your firm as a possible acquisition target.
2) If your firm is 20 years old or older, a professional valuation becomes vital since your whole way of thinking, as well as your priorities about succession will no doubt change once you learn its real world market value.
So when is the best time to sell your business?When you are aware of its real world value and when the planning for a smooth exit transition is behind you.
Its kind of like advertising .
.
.
.
it doesn't cost, it pays.
Good Luck!!
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