How to Succeed in Selling Your Business
As a larger proportion of the American population reaches retirement age, the issues of wealth transfer and asset management become even more prominent.
“The largest transfer of wealth in history is now underway, and it is in the form of established operating businesses owned by Baby Boomers,” according to a white paper by C2C Business Strategies, LLC, a business management and consulting organization specializing in business transitions.
Baby boomers and their transition advisors will face several challenges over the next several decades.
Some tips to make the most of the transition include:
– Prep work: Many baby boomer business owners have given little or no thought to the transition process, and they may find themselves unable to sell the business when they want to. Most financial consultants recommend a lead time of three to five years to prepare a business. Meanwhile, as more baby boomers seek retirement, the surplus of businesses available for sale may reduce business values.
– True value: Survey findings of business owners suggest that many overestimate the value of a business because they are basing estimates on projections or future orders rather than the current cash the business is generating.
– Good advice: Baby boomers looking to sell their business can benefit from a skilled transition advisor to guide and direct the process. Advisors can help business owners decide on a realistic price and determine a sale structure that works for both buyers and sellers.
As in the case of a real estate agent negotiating a home sale, a business advisor will find the right buyer for a business and will work with the buyer and seller until the transaction is complete.
Tips for business owners to help ensure a smooth sale include:
– Good housekeeping: Make sure all financial information is current and in order. Time is essential once a business-sale transaction is underway, so don’t slow down the process by scrambling for information.
– Flexible financing: Data show that sellers who accept financing terms receive, on average, 86 percent of their asking price, compared with 70 percent for those who will only accept cash.