A business owner who is thinking about selling his business sometime in the next few years recently asked me: “How soon should I begin working with a business broker?” My response was: “Probably a lot sooner than you think!”
The most common mistake I see business owners make when it comes time to sell their business is waiting too long. It’s been said that most business owners spend more time planning their annual vacation that preparing for the sale of their business – and some don’t even take an annual vacation!
The process of analyzing and recasting the company’s financial records, preparing the necessary marketing materials, identifying and screening qualified buyers, negotiating the letter of intent, completing due diligence and financing, and closing the deal for a small- to mid-sized company can take up to 12 months, and sometimes longer.
Frequently, the buyer will want the seller to stay on for several months – sometimes up to 6-12 months – to assure a smooth transition.
Lastly, to maximize the selling price the seller may need to clean up some aspects of the business and its financial records which can take 6-12 months, and sometimes longer.
Adding it all up, if you’d truly like to maximize the selling price of the business you’ve spent a great part of your working life building, and completely retire from it one day, you need to start at least 2-3 years in advance.
If you know of a business owner who’s thinking of selling or buying a business and who might benefit from a complimentary, strictly confidential, consultation with us, have them contact me at mertel@lmaallc.com
I’d be happy to provide a complimentary copy of my white paper entitled, Value Drivers To Maximize the Selling Price of Your Business.