Buzz Harris
In every business, whether it's manufacturing a product, providing a service, publishing a newspaper, or trying to sell a business, there are some fundamental steps that separate those who are successful from those who aren't.
Some of the fundamental steps to ensure a successful transaction are as follows. Initially, business owners need to prepare for the sale in advance to position themselves to have a good chance of getting what they want.
An exit strategy includes issues associated with financial records, estate planning, contracts, key personnel, etc., which can impact the attractiveness of the business.
Another key starting point is to put an asking price on the business that is reasonable. Too often, sellers put inflated prices that discourage potential buyers from giving the business any serious consideration.
Buyers will be motivated if there is sufficient return on their investment. Sellers need to ask themselves if they would buy the business at the price and terms they're offering. Continuing to operate the business as they always have is critical throughout the process.
It is important to carry on business as usual for a couple of reasons. Firstly, since the seller will not know when the buyer will materialize, the business's financial performance always will need to remain strong.
Secondly, when the buyer does materialize, it will be important to both parties that the business is moving in the right direction before the close of escrow, during the close of escrow and after the close of escrow.
Maintaining confidentiality is another important step. Again, this is important for both the buyer and the seller. A breach of confidentiality during the sales process can negatively impact the transaction, the business or both.
Another important step that is overlooked too often is for the seller to create a competitive environment. This might sound contrary to my last point, but it's not. Just like most people don't want to limit the sale of their house or car to one buyer, sellers shouldn't restrict their pool of buyers. They just need to do it confidentially.
For a successful transaction, sellers need to negotiate, but not dominate. This is not always an easy thing for some owners because they are used to being their own boss. They need to remember that the buyer they are negotiating with might also be used to having their own way.
Both parties must make sure that they focus on the issues that are important to them rather than details that are not critical. It is always important to keep the deal moving forward by establishing timelines, and then meeting them.
A good athlete always has a good training schedule, keeps it, and prospers because of it. Finally, as the deal is closing, be prepared to stay involved in the business, albeit in a significantly smaller manner.
Initially it can be in the form of training, but after this, try and be available for the buyer should they have any questions.
