But perhaps that alignment isn’t so strong anymore, and you may be seriously considering selling your business.
There are many reasons to do so. Perhaps you’ve envisioned turning the business over to your children, but they’re not interested. Or maybe it’s time to retire and enjoy the assets you’ve accumulated. Or you may have that itch to move from running a mature business to creating a brand new start-up.
Another option to consider is to sell your business, but remain as a senior leader, advisor, or consultant – either on a full-time or part-time basis. Given your existing relationship with suppliers, customers, and key employees, such an arrangement can actually increase the value of your business. Potential buyers could pay more for your business if you agree to stay on because it reduces their risk and lessens disruption.
Whatever your reasons, think carefully. The sale of your company represents a significant one-time event, with no “do-overs.” Selling your business comes with many benefits, of course, but there are some pitfalls to consider.
Some benefits of selling your business include:
- Structuring a deal that transfers your business to new owners and generates liquidity for you, but allows you to remain involved in the business if you so choose.
- Taking advantage of opportunities. It may be the right time to sell your business at the highest possible price. The overall economy and trends in your specific industry may create high demand and attract many potential buyers—but that could change over time.
- Providing an opportunity to maintain your involvement with the business you’ve worked hard to build, by serving as a senior executive or advisor to help the buyers ease the transition to new ownership.
- Diversifying your personal finances. If the equity in your business represents your most valuable asset, selling it allows you to turn some or all of those assets into more liquid and more diversified investments.
Consider these possible pitfalls of selling your business, including:
- Engaging in highly complex transactions that require extensive negotiations over a lengthy timeframe.
- A potential requirement that you sign a non-compete agreement, which could limit your ability to consult with similar businesses—or start another business over a specified timeframe.
- Possible need to finance a portion of the transaction, which can leave some of your assets at risk. If you remain involved with your business after a sale, however, new owners face less risk and may be willing to finance more of the sale price on their own.
Think carefully about selling your business. Be sure to consult with family and friends—and of course your attorney and accountant—before making this critical decision.
- If you’re not sure whether to sell your company, you may have “owner’s block.” This article by BCMS, “Owner’s Block: What it is & How to Break it,” offers some advice on making this critical life-changing decision.
- Consider various techniques for selling your business—even to your employees. This Wall Street Journal article explains various ways to “cash out of your business.”
- Learn more about issues to consider when planning a sale. This report from BNY Mellon goes into further details on some of the pitfalls you should look out for.
- Review this Nolo Press article, which presents eight steps to follow when selling your business.
- Read this Wall Street Journal article, “Selling a Firm? Stick Around After the Deal,” to learn more about the benefits of remaining involved with your business after a sale.
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