Recently I successfully concluded the sale of the wealth management division of Stratking Advisory Services Inc. as part of a restructuring plan.
Here are a few points I learnt from that exercise:
1. Ensure you are selling at the right time
It is said that we should “buy low and sell high”. Timing is everything. Are you selling high or low? Is this the right time? If it is not, what are you doing to prepare the business for sale? Maybe you have never reached that high in your gross revenue yet? Maybe the markets and economy is good and so you may fetch a better price? It is also said that time in the market is more important than timing the market..so should you continue the business a few more years to the extent that the price should go up the longer you hold it? Consider these things carefully.
2. Ensure you are selling to the right business or person
You have to take your time and do lots of research of your potential buyers. Are they are good fit for you and your clients? Do you like the owner of the other business? Would you be able to get along with him or her as a client or employee? Do they bring new technology, know how, distribution channels and access to markets that would enhance your business going forward so that they do not fail and destroy what you built. If the buyer is successful then you are successful.
3. Get your books and records in order
Have your completed your last years financial statements? Have you filed your tax returns? Have you completed your annual filings? Are your corporate records in order? In this regard seek the services of a professional Accountant and Lawyer.
4. Get your business professionally valued
You may have an idea of what your business is worth from your knowledge of your industry, but you may be short changing yourself without getting the independent opinion of a professional business valuator.
5. What are you selling?
Are you selling the inventory alone, clients alone, assets or everything?
6. What is the Plan B?
OK, you are going to sell the business, but then what? Are you going into retirement? Do you have enough money to retire now? Are you going to start another business and have you done a business plan for this? What would be the cost of starting the new business and before it becomes profitable?
7. Do you have time to stay around for a while?
Well you may be thinking of selling your business and retire to the Caribbean! Would that be nice? The only thing is that many buyers require you to hang around a bit to assist with the transition. How long will that be? Is the cost of that time factored in the price? You need to factor this in your plans.
8. Have a communications plan in place
You need to put in place a communications plan pre and post sale to address issues your clients, employees, suppliers and business partners may have. So there need to be an internal and external communications plan. Hire a professional marketing consultant if you do not have the expertise in this area.
9. Have you factored in restructuring costs?
You have to take some time and compute what your selling costs would be. This needs to be deducted from your estimated disposal proceeds to determine your net cash flow arising from the sale. Your Accountant should be able to assist in this area.
10. Risk assessment
Selling a business can be a risky process. You need to do a holistic risk assessment of the financial, reputational,career, marketing, tax and business risks of proceeding with the sale. Unsure, then bring in a risk management professional to give you an independent assessment.
These are a few of my top of the mind ideas worthy of sharing with you and I hope they were beneficial.
For over 20 years Dane had been helping professionals,professionally owned businesses an financial services firms grow their wealth, increase profits and reduce taxes.
Dane is a Chartered Global Management Accountant, Registered Public Accountant, Chartered Management Accountant(UK),Chartered Marketer and Financial Management Advisor. He is an author and public speaker on a variety of small business, tax, wealth management and marketing issues.
He can be reached at 1-888-865-3870 or firstname.lastname@example.org