When is the best time to sell my company? 

The ideal time to sell a company is during a period of solid financial performance.  When sales and profits have been increasing, buyers are more willing to buy, and lenders more willing to lend, on terms most favorable to the seller. However, this does not mean that a company cannot be sold if results are flat, or there have been some bumps in the road.  There are myriad factors affecting buyers’ readiness to purchase your business.  At the same time, if you are feeling ready to sell or actually need to sell for any reason, then timing will be largely driven by your personal motivations more than other factors. 

How long will it take to sell my company? 

An owner should anticipate it will take roughly six months to sell their company. This time is measured from the time an engagement agreement is signed, to the close of escrow.  Some companies will sell in less time, and for others it may take longer.  What determines the length of time required?  It depends upon many factors, such as the clients’ financial books and records, and the valuation factors listed on our website previously in Company Valuations.  A list of the key process milestones and associated timeline can be found in Information for Sellers. 

Do I need an attorney to sell my company? 

Attorneys can play an important role in the process of selling a business.  Frequently, an owners’ legal counsel will be a transaction attorney familiar with drafting and reviewing buy-sell agreements, bills of sale, notes and non-compete agreements.  The decision about whether and when to involve an attorney ultimately lies with the client.  We work routinely with our clients’ legal and financial counselors to ensure that the final purchase agreement deal structure and terms meet our clients’ objectives. 

How will the sale be kept confidential?

For most owners, maintaining confidentiality is one of the most important aspects of the sale process.  It is not a simple matter to keep the sale process confidential, however.  Ironically, the most common sources of confidentiality breaches tend to come from those parties closest to the owner (eg, family, friends, employees, bankers, professional advisors).  As your professional intermediary, we go to great lengths to ensure that marketing materials do not needlessly reveal the identities of either the business or its owners.  Buyer screening includes the signing of a Confidentiality Agreement (NDA) and detailed buyer profiles, to ensure potential buyers are serious, legitimate candidates to purchase the company.  Initial meetings and phone calls with pre-qualified buyers are structured to satisfy their appetite for information, but without giving away confidential or strategic information.  These and other techniques help ensure the sale process remains a private matter, until you choose to tell your customers and employees about it. 

Will I need to provide any owner financing to sell my business? 

Generally speaking, the majority of business owners would like to cash out 100% at the close of escrow.   At The Waterfront Group, we work to obtain the best combination of price and terms that meet our clients’ sale objectives.  These terms of sale, including any seller financing, are among the negotiable points of any purchase agreement.  Though not a requirement, your ability and willingness to provide at least some of the total financing will greatly enhance the prospects of selling your company in a timely manner, and at a price satisfactory to you.  Buyers, and their bank lenders, will see seller-financing (also known as “carry back or seller carry”) as your vote of confidence in this business, and in your ability to successfully transition it to your chosen buyer.  Conversely, a seller reluctant to finance even 10% of the purchase price will cause some very qualified buyers to think twice about pursuing a deal.  As a general rule, we suggest that owners consult with their financial advisor about the tax implications of a sale, to determine whether seller-provided financing could be helpful, or even preferable, to cashing out altogether. 

What can I do to prepare to sell my company, even if I am not currently ready to sell?

If you are already thinking seriously about selling, there are many short-term considerations that can help you prepare.  These are listed in our website section Preparing for the Sale.  If you expect to sell well into the future, then you may wish to discuss exit planning strategies with an advisor.  Planning for the succession of your company will involve several important considerations.  For example, to whom should it be transferred?  Are there family members or an existing management team that would be willing and capable of taking over the business?  Succession planning is an important process that will be best accomplished well in advance of need to transfer the business.  Please feel free to contact us if you would like to discuss succession planning for your business. 

What other questions should I be thinking about as a potential business seller?