I recently finished an interesting book that all business owners should add to their reading list. “Deciding to Sell Your Business – The Key to Wealth and Freedom” by Ned Minor [1] explores the notion that all business owners must first decide to sell their business before embarking on the actual sale process.
Mr. Minor is co-founder of a Denver-based law firm which focuses on designing and implementing exit strategies for privately held business owners. Minor has coached hundreds of business owners in this area for over 30 years. In Deciding to Sell Your Business, some of the fundamental questions that Minor addresses, along with a sneak peak at his responses, include:
Q. What will I do after I sell my business?
A. “You will have so many demands on your time that you will wonder how you ever found time to run a company.”
Q. Why should I sell my business?
A. “You should sell to achieve wealth and freedom while you are still young enough to enjoy it.”
Q. When should I sell my business?
A. “You should sell at the point when you achieve your definition of financial independence.”
Many of the issues addressed in our VSP 6 Step Exit Planning Process are also explored in Deciding to Sell Your Business. After reading Deciding to Sell Your Business, Minor suggests that business owners will likely find themselves in one of the following situations:
You are emotionally ready and your company is ready for sale at maximum price
You are emotionally ready but your company is not ready to be sold for maximum price
You are not emotionally ready and your company is not ready
You are not emotionally ready but your company is ready
You are ready to sell but a sale of your company will never generate financial independence
Your company will always generate a salary for you but it is not saleable
If both you and your business are ready, Minor suggests that you assemble your Advisory Team and initiate the sale process.
If you are ready but your business is not, Minor recommends calling a meeting with your Advisory Team to discuss value drivers and develop a value enhancement action plan, one that will help you achieve a target company value that will yield the desired net sale proceeds. This is also Minor’s suggested course of action if both you and your company are not ready for a sale.
If your company is ready but you are not ready, Minor suggests that you determine where you want your company to be (i.e. the next level for your business) and assess how long it will take to achieve. Once attained, you should then reassess your state of readiness and that of your company to ensure both are in alignment.
If you are ready but selling your company will likely never get you what you need then you should consider selling out and buying into another venture. Minor suggests that you keep trading up until you own a company that has the growth capacity to be sold at a price that will enable you to achieve your financial independence.
If you think your company is not saleable, it is Minor’s experience that there is usually a buyer for every business. To entice a buyer, however, you may have to carry back a significant portion of the purchase price and/or may have to remain in the company for a longer period of time after the sale.
If you want to prepare for the significant transfer of business wealth expected over the coming decade you must begin the planning process early. Reading Deciding to Sell Your Business or attending the VSP Exit Starter Program would be a great place to start. To learn more about Mr. Minor or to order your copy of Deciding to Sell, visit http://www.minorbrown.com/attorney/ned-a-minor.html. For details regarding the VSP Exit Starter Program contact us at jason@vspltd.ca or www.vspltd.ca.