Succession Planning: Tips to sell your business
A successful sale is a major milestone in anyone’s career. Succession planning is like a king or queen handing over their crown to the next generation. Whether it’s a retail shop, a busy manufacturing business, or a farm you’re wanting to sell or gift, the principles are the same. Selling your business is a milestone that will help you move forward with your life, and an achievement where success will be measured on how when you sell it, who you decide to sell it to, and how much you get for it.
Selling a business can be a very emotional experience. You have worked hard to build it up, built up strong relationships and made sacrifices along the way. Very often the purchaser is only interested in paying the lowest price for your efforts. Getting emotional about it is not going to lead to a successful ending. Instead, you need a rational argument for selling, and your Milestone adviser can help you prepare this.
- Develop a strategy taking note of when, what and who will help you take the business to market.
- As one of our better known succession strategists, Queen Elizabeth has learned, timing is everything. The longer it takes to negotiate a sale, the less likely it is to eventuate. Set yourself a timeline and keep to it.
- Prepare the business for sale. The potential purchaser will need to persuade the bank there are good arguments to buy your business. Have all of the arguments prepared and ready to pass on to them.
- Have realistic expectations. You need to have an independent valuation made of your business’s worth. You also need to be realistic about the transition period, where you may be expected to have input into the business for some time after the sale.
- Hold the business together. Too many businesses go downhill after a sale, either because the leadership has gone or the key staff become disenfranchised. You would not want to sell a car that broke down or a house that leaked after you had moved on. Payouts linked to performance are an expectation of most purchasers these days.
- Protect yourself. Make sure you have confidentiality agreements in place before you show a prospective buyer around, and that the financials you show them are accurate.
- Write down a list of non-negotiables. Don’t loose sight of your objectives while negotiating and make sure you have a written record of what you have agreed to so there are no surprises later.
Selling a business is a process that needs ongoing advice. Talk to your Milestone adviser about getting a team together that includes your accountant and lawyer, with clear roles ascribed to each.
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