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It's your passion. It's your livelihood. It's your business.
In many ways, it's your life. And it may be time to sell
it.
You might find this prospect daunting - or even downright
disturbing. But consider this: While 9 out of 10 family-owned
business owners believe their businesses will be controlled
by the same family or families in five years,' it's estimated
that only 30 percent of' these businesses succeed into the
second generation.
That doesn't necessarily mean the other 70 percent of
business fail. In many cases, the owner has deliberately
chosen to sell. Why? Reasons for selling your business might
include:
• No qualified heir apparent
• Desire to start new business
• Need for a new career challenge
• Illness or boredom
• Lack of resources to grow
• Retirement
If one or more of these reasons apply to YOU, and YOU choose
to sell your business, your most important decisions are
just beginning.
Issues to Consider
Before proceeding, ask yourself these questions:
When is the best time to sell? Generally, the best
time to sell is when the business is most attractive to
potential buyers; that is, when the business is posting
solid revenues and profits, or when a proprietary product
or technology-appears to have promise.
How much is my business worth? There are many variables
to consider when determining the value of your business
"Hard" figures include assets, liabilities, and historical
earnings and cash flow. "Soft" or subjective figures, such
as projected earnings future cash flow, and the value of'
intangibles (such as patents, know-how the quality management
and leases at below-market rates), should also be considered.
Should I sell the business myself? Just as you hire
an attorney and an accountant for their specialized expertise,
it's probably wise to seek professional assistance when
selling an asset as important as your business.
The Marketing Process
While the process varies, selling your company can generally
be broken down into five steps:
Preparation. This step includes assembling and organizing
documents, such as tax returns and financial statements;
valuing the business; and sprucing up the physical location.
Promotion. Consider placing ads in your daily newspaper,
local and national business newspapers and magazines, your
community's Chamber of Commerce newsletter, and other publications
read by prospective buyers. Also, use your network to promote
the availability of the business.
Buyer meetings. At these meetings, you and the potential
buyers can get to know each other, discuss issues related
to the business itself" resolve any questions, and begin
negotiating terms and conditions. Both parties should consider
signing a nondisclosure agreement promising to maintain
confidentiality
Close. This is when all legal documents are finalized,
ownership is transferred, and money actually changes hands,
typically through an escrow agent or trust officer.
Transition. The buyer may ask you to continue on
as a consultant for a specified time. And you may be asked
to sign a noncompete agreement, which reassures the buyer
that you won't try to lure customers away after the sale.
These are just some of the many factors to consider when
selling your business Before undertaking such a complex
and financially important venture, consider consulting the
appropriate professionals for expert guidance.
1) Arthur Andersen American Family Business
2) Florida International University family Business Institute
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