7 Ways to Get More from the Sale of Your Business

Thinking about selling your business? You are not alone. CNN Money report that 35 million baby boomers are expecting to retire between 2000 and 2020.

The value of your business represents a significant percentage of your total net worth. If you wish to adequately fund the retirement lifestyle you have earned, you must get every last after-tax dollar and get paid in cash when selling your business. Here are seven proven strategies for receiving the most value for your blood, sweat and tears:

Preplan the sale of your business. This should not be a spur of the moment decision. Rather, it should be well planned in advance. It is much the same as a home which will sell rapidly and bring top dollar with the benefits of a strong market, good financing options, a new coat of paint, and flowers in the yard.

Maintain complete confidentiality. It is vitally important that your employees, competitors and customers not be aware of your plans. The loss of employees or customers can rapidly decrease both the value and marketability of your business.

Do not put a price on your business. Once you put a price on your business, you create a ceiling, and you miss the opportunity to find the ideal buyer who would have otherwise paid top dollar.

Recognize the importance of finding the right buyer. Most businesses don’t have a value that is set in stone. Rather, they have a range of value. This means that different buyers will have different perceptions of the same business’ value. Thus, it becomes important to pre-plan your confidential marketing effort to gain exposure to multiple buyers, especially synergistic buyers – those buyers who because of their location, complementary customer base, financial resources, or market position, can profit more from owning your business and are therefore willing to pay more.

Recognize the risks in financing the buyer. Your objective should be to get “cashed out”, as the risks involved in financing buyers are very considerable. A default can have a major negative impact on your retirement plans.

Get professional help. Unless you have a background in taxes, legal issues and merger and acquisition work, you will probably unknowingly make a multitude of costly mistakes by trying to sell your business yourself. In fact, those mistakes, when combined with money lost from a transaction that doesn’t yield the best possible value, will typically cost you substantially more than any professional and competent assistance would require.

Do not pay advance fees. While you ultimately will need help in determining the value of your business and will need the right merger & acquisition firm to take you to market, what you don’t want to do is pay for their services in advance. Their fees should be earned and not paid until they have achieved the results that you want.

If you follow this advice and use good judgment, you will be well on your way to getting the maximum value for your business and moving forward with a well-earned retirement.