Trista Perot - Expert Business Broker

Ask for the MOON and Expect to Have to "Come Down" on Your Price

Place a reasonable price on your business. Since an inflated figure either turns off or slows down potential buyers, rely on your transaction specialist to help you determine your sweet spot.

Act Like You've Sold It

You need to carry on business as usual. Don't become so obsessed with the transaction that your attention wavers from day-to-day demands, which affecting sales, costs, and profits. Since the selling process will take some time, the buyer needs to keep seeing a healthy business.

Brag About It

Engage experts to protect your confidentiality. A breach of confidentiality surrounding the sale of a business can change the course of the transaction. Expert intermediaries can channel the process and the parties involved to keep the sale within safely silent bounds.

Think You Can Explain Where the Profit's Hidden - and the Buyer Will Believe You

Prepare for the sale well in advance. Be sure your records are complete for at least several years back and do all pertinent legal or accounting "housecleaning" - as well as a literal sprucing-up of the plant or store.

Don't Respond to Buyer Requests

Anticipate information the buyer may request. In order to obtain financing, the buyer will need appraisals on assets, such as real estate, as well as information to satisfy environmental regulations (when real estate is concerned).

Bet on the First Interested Party

Sellers often get consumed with the first buyer who expresses interest in their company and will spend eons of time trying to make a deal with just that one buyer. Achieve leverage through buyer competition. This can be tricky; you are wise to let your business broker, as a third party, create a competitive situation with buyers to position you better in the deal.

Cash and Carry

Don't be the kind of seller who wants all-cash at the closing, or who won't accept any contingent payments or an asset transaction. Depend on the advice of your advisor - their knowledge of financing and tax implications - to keep the deal sweet instead of sour.

My Way or the Highway

Negotiate; don't "dominate." You're used to being your own boss, but be prepared to learn that the buyer may be used to having his way, too. With your business broker's help, decide ahead of time when "to hold" and when "to fold".

Let the Clock Tick

Keep time from dragging down the deal. To keep up the momentum, work with your intermediary to be sure that potential buyers stay on schedule and that offers move in a timely fashion.

Sold and I'm Otta Here...

Be willing to stay involved. Even if you are feeling burnt-out, realize that the buyer may want you to stay within reach for a while. Consult with advisor to determine how you can best effect a smooth transition.

I got a phone call this morning from a business owner. And what he said to me caught me off guard. I've heard a lot of things from sellers and thought I'd heard pretty much every excuse in the book but this was a new one and fresh out of the gate. And I should have seen it coming.

He said, "I'm afraid of what happened last night."

I waited. Suspicious but not certain where he was headed. He continued, "I'm working hard to pay my bills, and I don't want to pay any more. This Health Care Reform isn't good for small business. I'm afraid of what's going to happen next. I want to sell my company now."

Wow.

Now, I don't tout my political affiliations. In fact, unless you're in the inner sanctum, you probably don't know which side of the line I vote on. And you probably don't know if I go to church or which one I attend, or which kind of shampoo I use for that matter. And I'd like to keep it that way. This post isn't about that. And my soon-to-be client has no idea what my opinion on Health Care Reform is, and he most likely never will. That's irrelevant.

What struck me at that moment is that we're entering into another phase of uneasiness for small business owners. It could work out pretty good for me, being a business broker. I could capitalize on the panic I suppose. Encourage owners to get out while the getting's good - except most don't think this we're in "the good" times right now. From what I see - and this is based solely on profit and loss statements - many are still reeling from the past couple of years and clawing their way back into the black. But for guys like my caller this morning who are looking at retiring in the next 5 years, hmmm. My guess is that they may not be sleeping as easy this evening.

Let's face it; selling a business is no walk in the park. I'm not here to tell you its super easy, but before a business owner can sell, he/she must make sure they are emotionally prepared for the roller-coaster ride of selling a business, which honestly can take a year or more from initial valuation to finalizing the deal. But even more important, he/she must also prepare the business to be sold. Ideally, you want to sell your business when it is at the peak of its growth cycle, earnings are high and there are no dead-weigh assets to have to explain away.

If you could identify when your business had that perfect mojo, then you hope and pray that your external forces are also in your favor at the same time. As a business owner, you want the business climate to have banks eager to lend, a vibrant growing economy, you want your industry to be booming and your business to be enjoying record profitability with the future looking even brighter than it is today. (Is anyone nodding?) If all these cards fell into place, you could get top dollar for your company, maximizing its value and selling at the highest price and on the best terms imaginable.

Reality is, most business owners don't sell when their business is booming or market conditions are perfect. It may be out of their control, the economy isn't great and they can't wait for "perfect" due to personal reasons, such as a need to retire or to free up cash to pursue other investment opportunities. Or heaven forbid, the business is sold because the owner dies unexpectedly or is otherwise unable to run the business. These scenarios and unscripted events increase the likelihood that the business will have a lower selling price than it would in better circumstances.

But you know what? That's okay. One of my favorite scripture verses is, "If you wait for perfect conditions, you will never get anything done." If you are a business owner and you are on the ledge, maybe considering a sale... it doesn't matter what's going on externally. Have a heart to heart with yourself and ask yourself a couple of questions:

•1. How motivated are you to sell? Selling a business is a lengthy process that can take a year or more from the initial valuation to identifying a buyer to finalizing the deal. You have to be committed to selling and visualize your end goal.

•2. Have you dressed your business for the prom? Most experts agree that owners should plan for the sale of their business at least three years in advance. You may even want to plan for an eventual sale as you're still building your business. It's hard, but look at your business from a buyer's point of view. Remember, buyers are looking for a reason to get a deal. You wouldn't sell your car without putting it through a good wash and detail first. You want every aspect of your business to shine when you take it to market.

If your answers to the above questions are "motivated" and "ready" then the bottom line is that there are an incredible number of variables that affect the sale of your business -- but you can control a lot of them. If you are contemplating a sale now or in the future, consult the advice of a transaction professional and evaluate which factors you can mitigate and how you can diffuse the value-minimizing ones. Your business broker can put together a good team of experts who will help guide you through the complex process of selling your company and reduce the headaches, the heartaches and ultimately protect your investment.

Have questions about selling your business or have a client with a business to sell? www.northtexasbusinessbroker.com