I could spend DAYS talking/writing about things you need to know about selling your business. The aspects of the exit strategy we THINK we know, the parts we are expecting but hoping to not deal with, and then the pieces that slap us in the face without warning. One of the questions I get the most is “How do you sell a business?”
Throughout my tenure in this industry, I’ve supported numerous clients in their exits. Working extensively within the VC-backed startup realm, my focus has primarily revolved around high-level Asset Purchase Agreements (APAs), acquisitions, and the transition to Initial Public Offerings (IPOs). While I haven’t frequently engaged in succession exits, which are often managed internally or with a family trust lawyer (a choice that often proves to be a significant error, approximately 75% of the time). I’ve gained comprehensive insights into the backend processes, due diligence, and exhaustive deep dive procedures.
For me, the due diligence process resembled a challenging game akin to Red Rover – where the opposing team aimed for our smallest player, expecting an easy win, only to be surprised when he outperformed, turning the tables unexpectedly (although it’s bewildering that such games were allowed in school).
Nothing thrilled me more than meticulously organizing everything they required in a well-structured file tree. I ensured files were consistently named and promptly returned, striving for excellence in every detail. My commitment is to be entirely available for any inquiries from the buyer’s tax attorneys and legal team. As an overachiever, I aim for the ‘Wow, that was impressive’ reaction from everyone I work with – it’s my constant goal, then and now.
Needless to say, prior to the ink drying, my ducks were in a row for my client. No hidden bodies or skeletons in closets here. Every detail was meticulously signed, filed, labeled, and accounted for, ensuring complete transparency and compliance. Every last document and cent. The piece that I did not plan for when it came to selling my firm, was the negotiation of the cost and what happens after the ink dried. For my clients, once that deposit hit the bank accounts, we no longer were involved, we just helped dissolve or merge what we had with whoever bought it. There was no more back and forth.
My APA was different from most of what I typically dealt with. There were no shareholders or anyone with equity. It was just me, a sole owner that started this business from the ground up and grew it into something that myself and my team could be proud to work for.
I never once even considered selling my firm. I didn’t really think that a professional services business was something someone would want to purchase. Naive of me, everything is for sale even a business and everyone has their price. You can fight me on that, but I mean it when I say everything & everyone. I had a price in my head, it was a ridiculous one, one I knew I would never get. But you have to have that number in case someone comes to you and makes you an offer. I didn’t get my price, but that was because I was not in an emotional state to be selling my firm, but I did it anyway. Having successfully navigated my own exit, I’m now dedicated to assisting others in planning their exit strategies, ensuring readiness on both the business and emotional fronts.
The 7 Things You Need To Know About Selling Your Business:
1- Know your goals and write them down. Business and professionally.
2- Make sure your back office is clean. Your agreements, record-keeping, and financials will undergo thorough scrutiny.
3- Be transparent. If you hide anything it’s a huge red flag and will likely end all negotiations
4- Before you even get into this process H.A.L.T.! Do not make any life-altering decisions if you are Hungry, Angry, Lonely, or Tired!
5- DO NOT go into this without an attorney and some sort of advisor (if you are new to this). You can typically write these fees into the payout, so don’t stress about that! It’s essential to surround yourself with experienced and impartial individuals who are actively engaged.
6- Once you start the process, you become enemy #1. If your team catches wind of this situation, it might cause fear, prompting at least one member to leave and potentially attempt to lure away clients and colleagues. Get ahead of this, this could ruin your exit.
7- Have a plan for yourself. RARELY do I ever see the owner of a company staying on at the new company long term and it works out. Be realistic. I recommend a structured 90-day exit plan featuring well-defined deliverables, culminating in a complete removal from all operational involvement. Trust me…Seriously, trust me.
If you are prepared, then this process is cake.
“By failing to prepare, you are preparing to fail”
– Benjamin Franklin
Enroll in our Scaleable to Saleable course today! Join us and let’s build, and sell your business.
