Selling your business can be an emotional experience. You certainly don’t want to be left at the end of the process with a sinking feeling that you have made a bad deal or sold to a buyer who doesn’t appreciate the value and legacy of the company you have built. However, there are things that you can do to avoid seller’s remorse; we will discuss several of them in this article for you to consider.
It’s best to begin putting together an exit plan sooner rather than later. Preparing well for the transition of a business requires time, action, and significant attention. For many business owners, their business represents the majority of their wealth. Planning for the transition allows you to have enough time to minimize taxes, prepare financially for a living situation without the income from the business and put a plan together for the next phase of life. Although typically, entrepreneurs are not the retiring type, knowing what your next move will be can be very important for your state of mind post-sale. Seller’s remorse can often be avoided by beginning to plan for the transaction three to five years before the business owner wants to exit.
For many business owners, their employees can be like a family, and they are very concerned about their well-being following a sale. Finding a buyer you trust that will take care of your employees may help you feel more confident about the sale. A larger buyer may bring additional benefits and opportunities to your employees that they couldn’t have before. Evaluating which buyer seems to be the most trustworthy and has communicated to you a plan of what the operations will look like post-close that most closely resembles your expectations can give you peace of mind.
Purchase Price. No one wants to look back on the sale of their business and feel that they left money on the table. To avoid this issue, it’s important to work with and speak to as many buyers as possible. If you are working with only one buyer, you might get a deal done, but you won’t necessarily know it was the best deal. Taking the time to work with multiple buyers will supply you with up-to-the-minute feedback on what the market thinks of your business and what the true market value is. A professional mergers and acquisitions broker can help identify and approach ideal buyers for your business. They will help you navigate the process and handle negotiations on your behalf to help you get a fair price for your company and a deal that you will be excited about. A broker can help you avoid selling your company in a deal that you later regret.
Being prepared for due diligence, having your records and documents organized and accessible for the buyer to inspect will make the due diligence process much easier. This process can be very time-consuming and is not for the faint of heart. Due diligence is the process that a buyer must go through to get comfortable with the business from a financial perspective. It ensures the accuracy of the information that has been presented and allows the buyer to know what they are buying. It is important that you carry on with running the business during this time as you would if it was not for sale and relied on any team members that can help you with the process. The due diligence process is a stage where things can go wrong with the deal if you are not prepared; putting systems in place ahead of time can get the deal across the line.
A financial advisor can help you understand how the deal will affect your wealth goals. They can walk you through how much money you will be getting at the closing table, keeping in mind fees and taxes. Many deals have contingent or deferred payments in the form of seller notes or earnouts. Understanding just the closing and contingent amounts can help you get the picture of the flow of cash that will come to you. Perhaps even more importantly, your financial advisor can help you understand what happens when you don’t get earnouts or notes. Working with a financial advisor ahead of the sale will help you know what you need from a deal in order to retire the way you want and not make any compromises. Ensuring that the deal structure and the valuation meet your financial goals is imperative to avoiding seller’s remorse. A professional financial advisor can help you get there.
Selling your business can be emotional and time-consuming. But when you are prepared and close on a deal with terms that you are happy with and help you attain your goals, you will be excited that the company and the legacy you created will live on.
Americas: Sam Smoot at +1 (813) 898 2350 / Smoot@BenchmarkIntl.com
Europe: Michael Lawrie at +44 (0) 161 359 4400 / Enquiries@BenchmarkIntl.com
Africa: Anthony McCardle at +27 21 300 2055 / McCardle@BenchmarkIntl.com
ABOUT BENCHMARK INTERNATIONAL
Benchmark International’s global offices provide business owners in the middle market and lower middle market with creative, value-maximizing solutions for growing and exiting their businesses. To date, Benchmark International has handled engagements in excess of $8.25B across various industries worldwide. With decades of global M&A experience, Benchmark International’s deal teams, working from 14 offices across the world, have assisted thousands of owners with achieving their personal objectives and ensuring the continued growth of their businesses.