From
The KDDK Advantage - November/December 2006
Selling Your Business
Can Be A Personal, Impactful Journey
KDDK frequently represents business
owners who are contemplating selling the business they
have worked a lifetime to create. Typically the idea
of retirement sounds alluring to these individuals after
years of facing the daily rigors of the marketplace.
But little do they realize how inextricably their life
and their lifeblood is represented by the business their
genius has created.
Once sold, a person’s life-work cannot
be replicated, and a daily trip to the golf course may
not satisfy the creative spirit. That’s why it is vitally
important
to the seller’s peace of mind — and to his or her financial future — that the
sale is done wisely and properly. The goal is to ensure that in the end, sellers
feel they have been treated fairly, they received for their business what it
was worth, and there are no regrets.
When it comes to selling one’s business
after decades of work and commitment, a number of worrisome
situations can occur. Usually, the seller has never sold
a business; thus, mistakes are made. And usually, those mistakes are irreversible.
Often the buyers they face are experienced at the game and know many subtleties
that can be costly to a seller. That’s one of several reasons it is risky for
a seller to navigate the waters unassisted.
The beginning point for protecting
a seller is making sure the business is priced right.
A good, solid business appraisal may be costly, but it
is invaluable.
Sellers may spend their lives watching costs and then, by scrimping on an appraisal,
unwittingly sell the business at a material discount. Even if a buyer matches
a seller’s asking price, that doesn’t mean the price covers what the business
is actually worth.
Failing to get the business ready
to sell is another way to unintentionally sacrifice value.
Preparations may require an environmental survey to make
sure a lurking
problem won’t derail the sale. Getting the company balance sheet in good order
is also of utmost importance. It may take an accountant a year or two to do
this, but it is imperative to ensure there are no contingencies
that can haunt the
seller after the sale. Nothing is worse than when a buyer asks a seller to
return some of the proceeds of the sale.
Most buyers want a good management
team in place - one that will stay - when they purchase
a business. The seller should work to make sure a good
team is
a part of the deal, and it’s also a good idea to include the management team
in communications, when appropriate, with the potential buyer. Also, don’t
forget that the company web site should be in tip-top
order because these days, web
sites serve as a company’s front door. Don’t let the web site appear dated
and neglected when the business goes up for sale.
The final word of advice is to have
reputable, professional consultants at hand as the selling
process begins. An accounting firm and business attorney
can bring
years of valuable experience to an inexperienced seller. And while selling
a business can be a difficult and very personal journey,
the assistance of consultants
who are not emotionally involved, as a seller often is, can make all the difference
in the seller’s level of satisfaction once it’s all said and done. Alan Shovers is a managing partner
at Kahn, Dees, Donovan & Kahn
where he has practiced for 38 years in the areas of business,
real estate, education, health care, estate planning
and tax & employee benefits law. If you have questions
about selling your business, contact Alan at 812-423-3183
or ashovers@kddk.com.
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