What will you do with your time, post-sale?
It is important to figure out what you are going to do after you’ve sold your business such as taking up a hobby, volunteering at an organization or traveling. You will need to give this some serious thought.
There will be time between when you decide you want to sell and the actual sale itself, so you will have about a year to contemplate what you are going to do in your next life.
If you sell your company, you will need to decide if you will want to go back to work. If you need to, you need to question whether now is the right time, especially if your company is profitable. Or, are you selling, hoping to cash out on the current business and use those proceeds to start another business?
If you are selling with the plan to retire, and you don’t have enough wealth generated even after you sell the company, it probably makes sense to work for a few more years until you have enough saved so that you can retire comfortably.
Or, if you are hoping for a windfall from the sale of your company, and you are hoping to live off the proceeds of the deal, that also could be an option. It is probably a good idea to speak with your accountant or financial adviser.
Do you have succession plan for your business?
If you are hoping to sell to a strategic buyer, having a succession plan is not as important. If you are hoping to sell to a financial buyer, private equity or venture capital, you will want to make sure you have a proper management team in place that can run the company successfully with out you. If the business is going to collapse without your there, that will become apparent during the due diligence phase. If you don’t have proper succession in place, you will need to work on moving other senior managers into the roles to replace you eventually.
Passion or exhaustion
When many entrepreneurs start heir business, they are passionate about their business but the industry as well. As the company matures and grows, your role transitions from start-up do everything to the manager of staff, customer expectations, strategy, often issues unrelated to your industry and instead, dealing with the business problems and putting out fires. The constant daily grind can wear you down rather quickly.
If you are finding it more difficult to get excited about growing your business, it might be the time to consider selling. If you aren’t building your business and continually thinking about next steps, it could start declining, making it more difficult to sell. It is much easier to sell a company that’s on an upward trajectory.
Is your business and industry on the way in or out?
It is easier to grow a business that’s in a growing industry rather than a declining. If you recognize the industry or technology shifting signals, now may be time to act.
If you are in a financial position where you can afford to, or at an age where you need to sell, you should call an M&A adviser at least two to three years before selling, to gather from him or her what housekeeping needs to be done in your business to get it ready for market.
Unfortunately, many entrepreneurs don’t take the time to contemplate what they want from their business, whether its regarding profits, long-term business growth, or more importantly, lifestyle. Most are caught on the entrepreneur merry-go-round, dealing with business issues, family, staff, banks and so no, and find it difficult even to plan this years strategy, let alone figure out whether its time to sell.
If you love what you are doing, then keep going. If not, and your passion is starting to wane, then maybe now is the time to an M&A advisor, have your first meeting and figure out what’s involved in getting your business ready for sale.
If you are doing it solely for the money, you might want to give some consideration to how much of your identity is wrapped up in the business and what life post-sale might be like.