Should I Sell My Business Now? Overcoming Common Misperceptions, Part II

As we introduced to you last week, the common misperceptions that tend to hold back owners from selling their businesses are usually based upon some combination of the following:

• The business isn’t worth enough to meet my financial needs.
• The employees (or customers) will leave when they discover I’m trying to sell.
• I will be required to work years for a new owner.
• Given the tax bite on sale proceeds, it makes more sense to stay, enjoy the cash flow and get paid over time.
• The sale process will take too long and cost too much.
• What will I do after I sell and leave the business? This business is my life!

 We previously looked at the first two common misperceptions that can influence your timing on selling your business — determining business value and losing employees or customers before you sell. We will follow up on this discussion by looking at the remaining common misperceptions that can affect your decision to cash out of your business and move on to the next stage of your life.

I Will Be Required To Work Years For A New Owner

If one of your Ownership Transition Objectives is to leave the business as soon as possible, it is important to make that objective known to your Ownership Transition Planning Professional and it will be a prerequisite of any sale.  That objective will determine which type of buyer you should seek.  There are categories of buyers who typically do not require the former owner to remain with the company beyond a short transition time period — usually no more than a few months — provided your management team is strong.

Given The Tax Bite On Sale Proceeds, It Makes More Sense To Stay, Enjoy The Cash Flow And Get Paid Over Time

With proper tax planning, Uncle Sam’s cut of the sale proceeds can be minimized so that you are in a better position to meet your financial and personal objectives upon your Ownership Transition from your business.  But planning — and implementation — can take years to be fully effective.  Delays in beginning to plan works to reduce time available and can increase taxes.

The Sale Process Will Take Too Long And Cost Too Much

Cost, of course, is a matter of perspective.  But the only way for you to make the determination whether the sale process is too expensive or not is to discuss costs and expenses with your advisors before you hire them.  It usually takes from six to eighteen months to sell your business.  The more you know, the better prepared your company can be for sale.  Better preparation on your part can mean less time and expense on the part of your advisors.

What Will I Do After I Sell And Leave The Business? This Business Is My Life!

For many business owners, the old “fire in the belly” is gone, but there is nothing to replace it.  So many hang on to their businesses, willing to accept what they know because they fear that the unknown may be even worse.  Yet, many owners don’t know what they will do when they complete their Ownership Transition.  In the words of a real-life business owner who faced this dilemma; however, exiting a business can end up uncovering new and exciting opportunities for owners to pursue after the sale.

“Doing the same thing every day was getting old.  I wanted to do something new and different and the buyer I chose (one of six) presented that new and different opportunity,” said Wayne Berger, former business owner.

Final Thoughts

Certainly, the decision to sell the business you created and nurtured is an intensely personal decision.  No one is more qualified to tell you what to do with the rest of your life than yourself, especially when it comes to the decision to sell your business.  The fear of the unknown is natural, but you do not have to venture on this journey alone.  Our office is available to help guide you through the process of preparing for the biggest financial event of your life.  We can help you review all of the factors associated with transitioning the ownership of your business and work to help remove the common roadblocks you may be facing, while addressing all of your personal and business objectives.  Our goal is to help business owners transition ownership of their businesses ON THEIR TERMS!