Compared to selling other assets, like real estate or publicly held securities, the sale of a business is often a very personal process with its own unique challenges. Where real estate or securities have active markets with large volumes of readily accessible data on historical transactions, pricing, and valuations, the market for privately held businesses can be much more complex. It is this complexity, along with the close personal connection that sellers often have to their businesses, that necessitates diligent planning to help ensure a smooth transition process.

As trusted advisors to our clients, we would be remiss to not share tips and recommendations for would-be sellers to consider before making the decision to voluntarily transfer the ownership of their business. Ultimately, all business owners will transfer their ownership in one form or another. Being prepared ahead of time can save headaches, or even lost potential value, further down the line.

What follows is a summary of a few key points in the planning/sale process from an article by William “Bill” Loftis, a lifetime Fellow of the M&A source organization.


Pre-Transaction Planning

The decision to sell a business is never an easy one but having thoughtful conversations early on prepares a business owner for the challenges they may face during the transition process. Key areas for a seller to consider before bringing their business to market include an assessment of their transactional options, along with their objectives both from a ‘needs’ and a ‘desired’ outcome perspective. It is important for a seller’s needs to be closely aligned with their transactional options.

For example, a seller may desire to transition the business to a family member but if the seller also needs the proceeds from the sale upfront – that transactional option may align well with their desired objectives but is more likely to yield a poor outcome as far as the seller’s actual needs.

Identifying the right counterparty early in the process, better positions a seller to make decisions that can make their business more marketable to that specific type of buyer. Pre-planning for a sale can even span multiple years, relative to how heavily the current business organization depends on the owner to operate. For example, delegating further responsibility to key employees can take time and effort, but often results in a business that is more attractive to buyers.


From Listing to Closing

From making the decision to sell, to actually listing the business and subsequently closing on a deal, there are many steps to navigate which can be intimidating to sellers. This is where an intermediary’s expertise shines. A skilled intermediary will guide a seller through all phases of the process, from vital pre-transaction planning steps all the way through to closing. This guidance can be as simple as being an unbiased party to discuss transactional objectives at the outset, to varying levels of complexity such as an assessment of business value to appropriately price the company prior to listing.

Having an experienced team to support you can make all the difference in the final purchase agreement terms, which will ultimately dictate the net closing proceeds a seller will realize. Even after closing, there is still work to be done for the seller who now faces a sudden liquidity event. We cannot overly emphasize the importance of having solid advisors to rely on while selling a business, for many business owners this is a once-in-a-lifetime event with no mulligans.

At Falco Sult, we look at your life from a big picture perspective, providing custom financial services that are tailored to your goals. From broad strategies to the tiniest details, we’ll help draw the map and guide you along the path to your own best financial future – regardless of what surprises lie ahead.

Contact us today to learn more about the transaction services we offer, we look forward to assisting you with your own business.