How to Sell Your CompanyZoran
Six years ago I was among the first people to be active on the Croatian start-upscene by encouraging the education of hundreds of people to start their own business. Now I mostly work with already existing entrepreneurs on how to build their business, and occasionally I have some inquiries to help people to sell their business. Especially at the end of the tax period and during the holiday season when people stop and ask themselves why they needed it at all. 🙂
I always remember with a smile a colleague from Great Britain, who just like me then, had his own mystery shopping agency and when he sold it, people almost on the street approached him saying: “Harvey, you sold your company, please help me sell mine.”
First of all, why do you want to sell? Most often in the conversation we realize that you do not want to sell but that you are burnt out, and that could be fixed and the business rearranged. Okay, you want to sell. All right. Maybe this is not it, there is no one to inherit your business, and you counted on your kids, you have got a good offer, you see a new opportunity, a potentially good synergy…
Except freedom and achievement the beauty in selling your own company is in the fact that there is 100% non-taxable money in your current account. (Yes, the geniuses have not yet come to the idea to take this from us; however I believe they will soon.)
Okay, but are you emotionally ready for sale? After all, it is „your little baby“.
What will you do after that? It’s okay that you do not have a clue, and that you do not do anything, but you’ll probably end up in the scenario – once an entrepreneur, always an entrepreneur.
Who are you without your company? (I had literally a brief identity crisis because I even changed / returned my last name.)
Will you be able to repeat / outdo the success with your second / third company…? (I thought about that as well, I was not even aware that this was stopping me for a while.)
All right, you have answered to all these questions, everything is clear and you still want to sell your company.
First of all: put in order all your paperwork/finances – let all be clear and let it shine, separate your private expenses from your business expenses, keep it all real.
Secondly: put in order your system – you have to arrange your company (if you haven’t yet) to function without you and to function successfully!
Thirdly: put people in order – right people in the right place, if you have not done it already train a person who will be in charge of the company instead of you (this is good also in case you won’t succeed in selling your company).
Next, first of all you must understand what you are really selling. What is what a buyer will buy? A brand, a customer base, a market entry … what exactly?
A price? Our company is always more valuable to us than to the other side. Let the professionals do the evaluations, there are rules and principles but nothing is impossible – work on your mindset, belief in yourself, etc.
Consider by yourself who might buy your company. Who can have benefits from your business activity? A customer, a supplier, a competitor? A potentially new player interested in your market? An entrepreneur investor who is interested in the area? Where can a synergy arise? Write a so-called Blind Company Profile – basic information about the company that a potential buyer might be interested in.
It is time to prepare the Confidentiality Agreement in case of further interest of the other side and to exchange all necessary data.
Prepare a presentation of the company – from your story, plans, and finances.
I would give over negotiations to the professionals if for no other reason than because we are too emotional when it comes to our business. It is our baby and it is worth a lot more to us than to anyone else. And we cannot be objective.
If all goes well, there follows a financial transaction and what later could concern us more / less is the integration with another company, depending on a fact if we stay at the head of our company for a while or not.
Although I am by nature an optimist and I believe in miracles, not everything can be sold. What we sell must have a value to the customer. It must be more worthwhile for him to buy your company than to start a new one from the scratch. Think from a perspective of a buyer. Likewise, it makes no sense to start a business and we discover we are not in the mood to continue, after a couple of months we decide that it is not it, and then we would like crazy figures because we have a really great idea, and at the same time we are small – we have a craft business or a small business. Yeah, yeah, thank you for your idea, performance is what counts.
In both previous cases when I was selling my own companies I personally identified potential buyers, and for the first company I hired those who dealt with it to prepare a presentation, evaluation of the company and to negotiate the amount. My former accounting also did a great support job during the negotiations and after integration.
When looking at the percentage rarely there comes the opportunity to sell your own business. Use the right one if it comes to it. And one very important thing – what people rarely talk about – enjoy the fruit of your labor without the sense of guilt and remorse. You do not owe anything to anyone. Not an explanation or an excuse. It is your success. You have already earned it. Well done.