If someone has offered to buy your business, congratulations! It means that you’ve caught the attention of the marketplace, which is a testament to your hard work and good reputation. Be excited, but don’t be blind! Make sure you take the time to ask yourself these tough questions and come up with some realistic answers.
Can you be happy with the cash at closing?
Before accepting a cash offer, make sure you are going to be completely happy with that amount when you agree to it. Don’t wait until it’s too late and you can’t negotiate anymore. You get one chance to agree to the value, so don’t waste it.
Can you sell your stock?
If you are accepting stock in exchange for your business, make sure you know its real-time value and whether or not you can sell it at will. This could change the entire value of the offer you are agreeing to. Stocks are not something you want to learn about after you’ve signed paperwork.
Can you live with your agreement?
You’re most likely going to be asked to sign several legal documents, including noncompetes, nondisclosure agreements and more. This is common. Just make sure you can live with it for the duration that is stated. Don’t limit yourself unless you know it won’t affect you in the future.
Are you agreeing to a non-compete?
Non-competes are serious deals. Make sure you understand what yours says before you sign it in case you are barred from potentially profitable endeavors that you are counting on for income. Plus, if you accidentally break your non-compete agreement, you could be in serious financial trouble to compensate for your mistake.
Can you live on your cash until your non-compete expires?
If your buyout cash represents all the money you’ll receive until your non-compete expires, make sure it is enough for you to live on. Do some calculations to determine if you’ll be able to confidently fund your life until you’re allowed to start profiting from other sources of income barred by your non-compete.
Book your consulting call with Todd today to better evaluate yourself!
What will your decision cost you over the next five years?
Before you sell your business, project what your next five years of earnings potential will be for your company. There’s a chance that your business is going to be worth more to you if you kept it rather than sold it. However, you take the risk of it being worth less as well. When you sell, the buyer is betting on it being worth more. Make sure you are okay with the fact that the buyer will gain the benefits of any increase in value once you hand over ownership.
What will your decision earn you over the next five years?
The decision to sell could earn you a considerable amount of money as well — either in straight cash or stock value. Make sure you weigh that value against what you could potentially miss out on if you sell now.
Is there a better offer?
You would be amazed at how many people take the very first offer that lands on the table. You should always see if there are other or better offers available to you when it’s time to sell your business. Have confidence in the value of your business — especially once you’ve had your value determined by a third party. Make sure you are selling it for what it’s worth and not for what one buyer is willing to pay.
Why do you want to sell now?
This can be a deeply personal question that you need to explore. You need to determine why you’re interested in selling your business now. If your answer is, “Because someone made me an offer,” then you might not be ready to sell your business. Stop. Take a timeout. Evaluate if you’re actually ready to sell.
There are stable reasons to sell your business, and there are unstable reasons to sell your business. Stable reasons are fueled by logical, mathematical and weighed planning that has brought you to your final decision.
Unstable reasons are often based on emotional bias. It’s easy to get sucked into the excitement of a buyout offer and forget to really consider if you even want to let go of your business. There are a lot of implications and consequences of this decision, so make sure you have a real desire to sell, and not a passing fancy.
Whose counsel do you need?
You’re going to need good advice when it’s time to sell your business. The advice of wise counsel is going to make you feel secure and informed when making your decisions. Make sure you speak with the following people when considering the sale of your business:
- Your spouse
- Your business partners
- A tax attorney
- A business attorney
- Your accountant
- Your role model that has sold their business successfully in the past
- An independent evaluator
- Your business coach(es)
Business Coaches At Your Disposal
Just the fact that you’ve made it this far in your business sale consideration process is a great step. Never underestimate the assistance you’ll need to make a successful business sale. Ask any one of our coaches at Service Excellence for help and not only will they give it to you, but they can also connect you with the people and resources you need to make this process flawless. Just reach out!
Make sure to review the other 3 steps in the Selling Your Business Series: Making Your Exit Strategy, Establishing Your Value and Understanding Your Buyout Offers!
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