Selling a Small Business – Get Five Points Right

Selling your small business is not usually an easy task. Endless articles and sources of information tell us the tasks of getting prepared, doing the search, preliminary negotiation, etc., etc. Unfortunately, most of it is correct. However, when we break it down into small chunks, it gets a little easier to digest, but you still get heartburn.

First is the decision to sell your pride and joy. It's a big decision, even if someone comes to you with an offer you can't refuse, which happens in the movies.

Next comes getting the business ready. Financials, documentation, employee issues, customers and vendors hearing your going out of business...lots to be concerned about.

Then comes the search for prospective buyers. Brokers, if they will even talk with you, want 10% for what seems like a few phone calls, a lunch and sign the commission check. If only their task was so simple.

Now comes the dance. It's called due diligence. If you were not aware of some of your problems, the buyer will find them, make up some more, and you will come away with an inferiority complex demanding of the best shrink in town.

If life is good, there actually comes the close, and you get to buy that condominium in Florida . But not until you nearly had a stroke from the number of times the deal almost fell through at the last minute.

Five Points:

There is a way to look at the above steps, and keep them in perspective for both the buyer and seller. Consider five points for each side:

You, the seller, want a buyer who is serious about buying, not shopping; who wants what you have to offer; can pay for it; is easy to deal with, and you trust them to be honorable in the process of buying your company.

The buyer wants you to be serious about selling, not testing the market; wants what you have to offer; can pay for it; you are easy to deal with, and they trust you to be honorable in the selling of your company.

The difference is in the details, in the perception from opposite sides of the table, in the reality of past experiences, and what you and they have heard about similar transactions.

To Make a Deal:

Don't assume this, but you both better be serious, or there will be a lot of frustrated wasted time.

There will be some differences regarding what you are selling and they are buying. There will be surprises during the process and even after the sale is complete. That is to be expected, and hopefully they will not be material issues.

There will definitely be disagreements as to the amount you want, and the method of payment. There should be a way to negotiate this to satisfy both sides.

The last two points for each side will add support to the likelihood of a deal or break it, are probably more important than the first, second and third, which usually can be negotiated.

Each of you need to be easy to deal with, or the transaction will likely stumble over itself in the process.

Finally, you better trust each other going in, or don't bother wasting your time, the deal will not happen.

Deals are made when the both parties want it to happen, work at it fairly, and trust each other. If you are not prepared to make those adjustments, stay away from buying or selling a small business, because it probably will not happen successfully.

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