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Patience is a Key Piece of Selling Your Business
Knowing What to Expect Makes Selling Your Business Easier
Within minutes of deciding to sell their businesses, some owners are already picturing themselves sailing serenely on the clear blue waters of the Pacific – or golfing – or spending time with family. What they don’t realize is that making the decision is just the beginning.
Selling your business is a process with many pieces that fit together. It can take time and there is work involved. Although the workload is lessened considerably when you employ experts to give you a hand, there are still many things to do that simply cannot be rushed.
When you know what to expect and have done what you can to expedite matters – because there are things you can do – the journey can be relatively easy. Often, however, owners aren’t prepared for what lies ahead. This results in frustration and the urge to speed the process along, which can be stressful and may even delay the transaction.
As an entrepreneur myself, I wholeheartedly understand the desire to get the deal done and move forward with life. I, too, have been frustrated by the selling process, simply because I was inadequately informed about, or prepared for, the journey.
That’s why education is such a big part of what we do at The Alberta Business Exchange. Patience is important in every phase of the transaction, and you can only be patient when you understand what’s going to happen and why. So when we visit with people interested in selling their businesses and moving into the next phase of their lives, our first goal is to ensure they fully understand what will happen each step of the way.
For example, it is true that many vendors receive offers very quickly after we begin the marketing process. It is not uncommon to see a seller accepting an offer just days after posting a listing.
But this may not be the case with your business. Sometimes confidentiality parameters are so tight that marketing must be done very carefully. In other situations, there are fewer potential buyers.
One of our current listings is a retail business with a very unique product. The business is an excellent investment opportunity but the right buyer will be someone with a passion for the product. Waiting for that buyer to enter the market could have been torturous, but because we knew from the beginning that finding the right buyer probably wouldn’t be easy, the wait, for the vendor, has been much easier to accept.
“Patience is not simply the ability to wait – it’s how we behave while we’re waiting.” – Joyce Meyer
The Journey Has Many Steps
Although few people know it, signing a listing agreement with a broker is not the first step in the selling process. The first step is what In the simplest terms, grooming your business means making it look its best to attract the right buyer. What’s done during this phase is very business-specific and will also depend on how motivated you are to get the best price.
Taking your time during this phase can produce excellent results. An offer recently came in for a $7-million business just a few weeks after the marketing process had begun. That’s fast for a business of that size. But what’s significant is that my initial meeting with the owners was a full nine months prior to being formally engaged by the owners.
In those months, the owners had patiently engaged in extensive grooming. They’d invested in new equipment to eliminate the capital expenditures the buyer has to face, decentralized management to reduce the amount of time the vendor would have to spend transitioning the business, and spent considerable money to increase the efficiency of the operation.
Their reward? An offer came in quickly. In addition, improvements to efficiencies and cash flow resulted in a higher selling price.
When grooming is completed, a broker is formally engaged. But it’s still not time to set sail. Patience is again required as you collect the necessary documentation and provide information for the preparation of a professional marketing package.
Eventually, the day comes when an offer is accepted. It’s tempting to breathe a sigh of relief at this time, or even start celebrating. But once again, patience is your best friend. Only 92 per cent of accepted offers close. Buyers must perform their due diligence, investigating the business thoroughly. This is the most stressful time for both buyer and vendor.
The situation is made even more difficult due to the necessary reliance on outside parties. Accountants, lawyers and bankers are critical to a successful transaction. But they’re busy and may not be able to maintain the stipulated time lines. Everyone must remain calm and remember to maintain confidentiality during this phase.
Finally the deal closes. While the journey is almost over, there is still the transition phase to get through. The length of this phase varies, as does the frustration level experienced. Remaining patient will ensure the terms of the transition plan are properly fulfilled so that you really can move into the next stage of your life.
Preparing yourself for what lies ahead is key to your success. If you’d like to learn more about what to expect throughout the sale process, or if you want to discuss actions you can take today to begin grooming your business, please feel free to give me a call or contact us. I’d be pleased to provide the information you need to ensure a successful journey.
Let Us Become Your Business Sale Advisor
In a nutshell, our transaction advisory services are focused on you—your questions and concerns, and the emotions you experience throughout the process. We become another of your trusted advisors, along with your accountant and lawyer, someone who understands you, who you can lean on when you need help.
