1. Maximize Value
- Financial: Planning gives you time to improve financial performance, ensure your financials and organizational records are accurate and to standard, and address the multitude of variables that affect the ultimate valuation.
- Timing: Sell when you choose–when the economy and/or your industry is strong and the market favorable.
- Highlights: Use planning time to develop and be prepared to highlight and showcase key strengths, such as a strong customer base, efficient processes, solid organization, or any other aspects of the business could increase the sale price.
2. Aligning with Personal Goals
- Exit Strategy: Planning ensures that the result of the sale aligns with your personal and professional goals, providing financial freedom as you move forward.
- Tax Efficiency: Planning can provide time necessary to help structure a transaction to minimize tax liability to the extent possible.
3. Transition
- Retention: Planning can provide time to develop incentives to retain key staff and plan a transition that does not negatively affect employee morale or sense of job security.
- Relationships: A planned, orderly transition helps preserve goodwill with customers and suppliers, vendors, ensuring continuity after the sale. A planned, orderly transition can also be easier on family and partnership relationships.
- Transition: In some sales, buyers may request, or insist that the owner stay on in a training capacity. Planning provides time for this handover.
4. Avoiding Pitfalls
- Risk: There are many risks that can derail a sale: Loss of key personnel; Loss of key customers; Lawsuits, etc. Planning provides time to evaluate and mitigate risk.
- Price: Planning helps ensure that buyers will find that your business stands out among peers, helping you realize the business’s full potential value.
- Legal Issues: Planning helps minimize the likelihood of future disputes.
5. Customizing the Deal
- Terms: Planning allows you to fine tune the business for sale. Generally speaking, the more attractive the business to the buyer, the more leverage you have over terms.
- Legacy: You’ve built something–likely for decades. There’s a good chance you care about your legacy, your employees, and the role the business plays in that legacy. Planning allows time and resources to address these, and again to fine tune the business for sale to get you the leverage to negotiate terms.
Ultimately, thoughtful preparation gives the business owner control over the process, ensuring that the sale meets both financial and emotional expectations.